State rakes in mega profits from sugar tax

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It appears that South Africans’ preference for all things sweet will see Treasury exceed what it expected to collect in taxes on sugary drinks.

The state’s total income from taxation on sugary drinks in 2018/19 was R3.25 billion.

Taxation on locally produced sugary drinks comprises R3.2 billion of this amount – R1.32 billion more than government expected to collect when the so-called sugar tax was introduced in April 2018.

Read: Health industry welcomes sugar tax but reckons ‘it should have been higher’

This is according to information contained in the latest taxation statistics from Treasury and the SA Revenue Service (Sars) for the 2019/20 financial year.

The purpose of introducing the tax was to help fight diabetes, obesity and other related illnesses.

However, various industry role players say the tax has done little to change consumer behaviour – and is constraining the sugar industry and manufacturers.

The R3.2 billion in sugar tax on locally produced goods was R1.5 billion more than the anticipated income of R1.7 billion, which was predicted for February 2018 – and was R799 million more than what was predicted for February 2019.

The tax statistics, published last month, give an overview of tax income since 2015.

The government has also introduced various environmental taxes over the past few years to help change consumer behaviour in light of the climate crisis.

Read: Treasury eases sugar, carbon taxes. Blade’s colleges move down the queue

These include taxes on tyres, on plastic bags, on electricity generation from nonrenewable sources and on halogen (non-energy-saving) lightbulbs – at a cost of R8 a bulb since April 1 2018 – as well as carbon taxes on vehicle exhaust gases.

Over the past two financial years, these taxes contributed R10.9 billion to state coffers.

Sars collected a total of R1 288 billion in tax revenue for the 2018/19 financial year – R14.5 billion less than the adjusted target of R1 302 billion.

The target was adjusted downwards because of the poor economy, VAT repayment backlogs from previous periods, higher tax refunds during the current season and lower company taxes.

In 2018/19, personal income tax made up 38.3% of the total sum collected, VAT made up 25.2% and company taxes made up 16.6%.

The greatest proportion of total tax collection – 57.4% – comes from taxation on income and profit. In 2018/19, it made up 58.5% of total tax revenue, but the sum was smaller.

The R3.2 billion in sugar tax on locally produced goods was R1.5 billion more than the anticipated income of R1.7 billion, which was predicted for February 2018 – and was R799 million more than what was predicted for February 2019.

Taxes on income and profit include personal income tax, taxes on companies (capital gains tax and withholding taxes on royalties), interest on outstanding income tax and dividend tax.

In respect of taxation on income and profits, the taxes that individuals pay make up 66% of the total income.

The second-largest portion of total income tax comes from the category of domestic tax on goods and services, which made up 35.8% of the total income in 2018/19. In 2017/18, it was 34.7% of the total income.

Domestic tax on goods and services includes VAT, excise, ad valorem duties, turnover tax for micro business and environmental taxes, including the fuel levy.


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