Sugar tax all set for Parliament approval

Parliament's finance committee has adopted bills which provide for the introduction of a health promotion levy (the sugar tax) as well as amending the tax exemption for income earned by South Africans working abroad.

The health promotion levy is one of the provisions in the Rates and Monetary Amounts and Amendment of Revenue Laws Bill while the tax exemption provision is contained in the Taxation Laws Amendment Bill. Both bills will be presented to the National Assembly for debate and adoption.

There has been intense debate about the health promotion levy‚ which has been proposed in a bid to reduce the level of obesity and the high incidence of non-communicable diseases. The agricultural sector and trade unions warned of the danger of thousands of job losses‚ which Treasury conceded were likely though not to the extent predicted. The matter was also discussed in the National Economic Development and Labour Council (Nedlac).

An inter-department committee consisting of the Treasury and the departments of economic development‚ agriculture‚ trade and industry and labour also worked out a mitigation strategy to limit the impact of the proposed levy on sugary beverages.

Treasury expects the levy to take effect in the first quarter of next year once the bill is promulgated. The proposal has been on the table since July 2016‚ with the tax rate being amended in the February budget‚ from 2.29c a gram of sugar to 2.1c a gram and a threshold of 4g of sugar per 100ml was introduced‚ below which the levy would not be imposed.

Beverages that will be exempt from the tax are 100% fruit and vegetable juices which will be considered for taxation at a later stage and milk products with no added sugar.

Regarding amendments to the tax exemption for income earned by South Africans working abroad‚ the 183-day exemption will be retained and a R1m ceiling introduced on income that can be claimed under it. The measure will take effect on March 1 20d20.