By Kudakwashe Pembere
The implementation of the sugar tax introduced last year by Finance Minister Professor Mthuli Ncube has raised concerns about the authenticity and transparency of the tax collection figures.
In his 2023 budget presentation, Professor Ncube proposed a sugar tax on sweetened beverages, sparking mixed reactions across sectors. Initially set at US$0.002 per gram, the levy faced strong opposition from industry players, who cited potential negative impacts on business viability and job security. As a result, the tax was reduced to US$0.001 per gram in February 2024.
Government figures indicate that US$18 million was collected from the sugar tax by September 2024. However, industry sources suggest that the actual amount raised may be significantly higher.
Health and Child Care Minister Dr. Douglas Mombeshora, speaking at a Health Development Partners Coordination Forum in July, stated that US$8 million from the sugar tax had been allocated for health purposes.
“There is an issue of sugar tax which I should mention now because yesterday (Thursday) I had also challenged the Minister of Finance in terms of how much the sugar tax is, because from the beginning of the year, we have not yet utilized a cent. And yet sugar is consumed every day,” he said.
“I am glad to say that yesterday, they said there is US$8 million now for us to utilize. But this is going to target the procurement of cancer treatment machines and drugs.”
Industry Perspectives
Delta Beverages raised concerns, estimating that they would pay over US$46 million by year-end. An investigation revealed that the company paid US$13 million by June 2024.
“Delta and Schweppes paid a combined amount equivalent to US$13 million for the period February to June 2024. There has been a reduction in volume due to high price increases resulting from the sugar tax. Sugar tax is paid on the 20th of the following month, so the June amounts were paid in July. We are also experiencing lower demand due to informal imports of our brands from regional countries with lower taxes. We still expect to pay over US$25 million in sugar tax by December 2024 after factoring in the waiver of January 2024 amounts,” a Delta representative said.
Efforts to get a comment from the Zimbabwe Revenue Authority (ZIMRA) were unsuccessful at the time of publication.
Delta’s Finance Director, Mr. Alex Makamure, provided further clarity during an analyst briefing for their September 2024 results.
“An equivalent of US$20.5 million was paid as sugar tax by Delta Beverages and Schweppes Zimbabwe for the period February to September 2024,” he said.
He noted that Schweppes recorded a 9% decline in volume over six months due to price increases driven by the sugar tax. “The business was also affected by a surge in imports of Mazoe Orange Crush from regional markets, driven by the price disparity created by the sugar tax. Additionally, fiscal regulations disrupted the route to market,” Makamure explained.
Dairibord Holdings reported paying US$1.5 million in sugar tax between February and June, which increased to US$2.4 million by September.
“Since its announcement in November 2023, Dairibord’s Research and Development team has been working on reformulating products to reduce added sugar. The sugar tax payable per month is a function of sales volume and product mix, as different products contain varying amounts of added sugar. Dairibord pays between US$100,000 and US$300,000 monthly in sugar tax,” said Group Chief Executive Mercy Ndoro.
Calls for Accountability
Health economist Dr. Prosper Chitambara called for the funds to be ring-fenced, similar to the AIDS levy.
“For that to happen, enabling legislation is required. Currently, the funds go into the consolidated revenue fund, which poses the risk of being diverted to other purposes. Ring-fencing would ensure the funds are used for cancer treatment as intended,” he said.
Community Working Group on Health Executive Director Itai Rusike emphasized the importance of the tax in raising additional revenue for cancer treatment.
“This aligns with regional and global best practices. The WHO has been advocating for a sugar tax on sweetened beverages to combat non-communicable diseases,” Rusike said.
The conflicting figures surrounding the sugar tax have highlighted the need for improved transparency and accountability in its implementation. While the tax has the potential to generate significant revenue for health interventions, ensuring its proper utilization remains a pressing concern.-IDT
