The Government has condemned the misuse of the beverage and sugar content tax and other tariff measures by some companies who deliberately misinterpret clear policy proposals to make profit while unjustifiably penalizing innocent consumers.
While consumption taxes are imposed on the consumption of goods and services and are generally imposed at the time of the transaction, some companies have gone to great lengths to apply these taxes disproportionately beyond their intended purpose, sparking protests from consumers.
Examples include recent outrageous increases in the retail prices of soft drinks, alcoholic beverages and a range of value-added diluted juices. Others went so far as to wrongly apply the tax to raw sugar.
In a statement yesterday, Minister of Finance, Economic Development and Investment Promotion, Professor Mthuli Ncube, said the implementation of the sugar tax, in particular, had been misunderstood by businesses, and expressed government disdain for the recent price increases attributed to it.
The government has already committed to protecting revenues generated from the sugar content tax on drinks initially for treatment and the purchase of cancer equipment for cancer diagnosis.
As a demonstration of this commitment, Professor Ncube said the Treasury would soon commission the machines purchased from it, and advice on subsequent procurement would be provided accordingly.
Despite the above positives, he said the government was disturbed by the unjustified increase in the prices of some drinks, which was unreasonably attributed to the effect of the tax on the sugar content of drinks.
“Such behavior by responsible manufacturers, wholesalers and retailers is clear evidence of incorrect interpretation and, in some cases, profiteering.
“Government has at its disposal the prices charged by these operators before the relaxation is implemented, the maximum impact of the beverage sugar content tax on the beverages in question and their expected prices,” Professor Ncube said.
“The sugar content tax on drinks was misunderstood as a tax on sugar, when it was applied differently. The minister explained that the tax applies to the percentage of sugar in the beverage(s) specified in current legislation.
“The government wishes to categorically emphasize that the tax does not apply to sugar in general and, therefore, should not be wrongly construed as affecting normal consumption. Sugar producers are therefore not affected.
Specifically, Professor Ncube explained that the sugar tax is applied to “added sugar” in specific drinks, excluding natural sugar, to encourage responsible consumption of the sugar contained in them.
He said: “It is scientifically proven that excessive consumption of added sugar in drinks is associated with an increased risk of non-communicable diseases.”
“The revision of the tax to 0,009,001 per gram is a cherished testimony to the government’s commitment to carefully consider and adopt constructive inputs from relevant stakeholders.
“The government also recognizes that some producers cannot immediately reconfigure their production processes, while there is a commitment to reduce sugar content by other manufacturers.”
On the other hand, he urged consumers to make a conscious choice to consume responsibly given the negative impact of excessive sugar consumption on their health condition.
“The government, keeping in mind the principles of transparency and accountability, is seizing this opportunity to enlighten the general public on the broad tax policy considerations that have traditionally guided the development of the tax system, particularly consumption-based taxes,” Professor Ncube said. .
He said it is frustrating that some companies tend to thwart progress at a time when the implementation of the National Development Strategy (NDS1) requires recognition and adoption of bold and transformative measures to support efforts towards achieving our Vision 2030.
He added that one of these measures includes imposing a tax on sugary drinks that aims to address quality of life and health issues by mobilizing revenues that will be directed towards these issues.
“Government has recently noted with concern the forced nature of input from some stakeholders on the recently introduced tax measures, despite the distinct role between stakeholders and policy makers,” Professor Ncube said.
The Minister said that targeted tax instruments were crucial around the world and could be used to influence or redirect this consumption, especially when consumption is considered or scientifically proven to impose negative externalities on society.
He further noted that the development and improvement of tax policy measures has always been the result of a consultative process that included business, consumer organizations, civil society, academia, government agencies and the general public, among others.
“Such consultations come in light of the essential roles of stakeholders to exercise the constitutional right to influence public policy in a responsible manner, with the aim of developing this great nation,” Professor Ncube said.
“The government will continue to consult, as widely as possible, with relevant stakeholders, with the aim of ensuring the enactment of evidence-based policies.”
He also reaffirmed the government’s commitment to implement measures aimed at achieving the objectives of the first National Development Strategy in a timely manner, while recognizing President Mnangagwa’s slogan: “Nyika inovakwa nevene vayo/Ilizwe lakhiwa ngabanikazi balo” Herald
