Industry calls for Sugar Tax review

Farirai Machivenyika-Senior Reporter

THE Confederation of Zimbabwe Industries has called on Government to review the sugar content tax on beverages, saying the levy was having unintended consequences.

The tax, introduced in 2024 to mobilise resources for the procurement of cancer treatment equipment, has raised nearly US$100 million, with Government using the funds to procure four cancer treatment machines for Mpilo Hospital in Bulawayo and Parirenyatwa Group of Hospitals in Harare.

CZI chief economist Mr Cornelius Dube made the call in a presentation to the Parliamentary Portfolio Committee on Industry and Commerce on the organisation’s expectations for the 2027 National Budget, which is expected to be presented next month.

“The sugar content tax is having unintended consequences not only for the beverages industry, but also for the broader sugar industry value chain,” he said.

The tax is currently US$0,001 per gramme on sugary beverages and US$0,0005 per gramme on cordials.

“This means from a cost perspective, for every tonne of sugar that a beverage producer would use, they would have paid US$1 000 on sugary beverages and US$500 on cordials at a time when the average price of sugar is about US$800 per tonne,” said Mr Dube.

He said feedback from industry players showed that the tax had accelerated the substitution of locally produced sugar with artificial sweeteners, posing a threat to the long-term viability of the local sugar industry.

“The use of artificial sweeteners has more than tripled since the introduction of the tax, while growth in the sugary sector has slowed markedly, with the industry estimated to have lost at least 20 percent of its anticipated growth potential,” Mr Dube said.

He also said imports of grey-market beverages had increased by 10 percent, creating unfair competition for compliant local manufacturers while reducing the effectiveness of the tax as a revenue and public health measure.

In its recommendations, CZI called for a review of the sugar content tax to strike a balance between public health objectives and industrial development, employment preservation, value-chain sustainability and alignment with regional practices.

Mr Dube said Government could introduce exemption thresholds similar to those in Botswana and South Africa, where a levy-free threshold of 4 grammes of sugar per 100 millilitres applies to ready-to-drink beverages.

The sugar content surtax would then be applied only to sugar above the threshold.

Portfolio Committee chairperson Cde Clemence Chiduwa said the committee would compile a report for presentation at the annual pre-budget workshop for MPs later this month.

“The focus of the committee is, ‘let’s mobilise and generate resources for funding the budget but in the process let’s look at taxation which is coming from Treasury’.

“Let’s tax for growth instead of revenue because, at the end of the day, what we want is to develop the economy, to grow the economy,” he said.

Source: Industry calls for Sugar Tax review – herald

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