It may be April Fool's Day tomorrow, but the hikes are no joke

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Johannesburg - It's no joke - April 1 is going to be a bitter egg to swallow. The country’s new one percentage point increase in value added tax (VAT) will take some of the sweetness from your Easter Sunday tomorrow. Also tomorrow, the introduction of the Health Promotion Levy, or sugary drinks tax, on sugar-sweetened beverages will also hurt. The fuel price is set for a steep rise as higher fuel levies kick in, and as an increase in international fuel prices makes its presence felt. The plastic bag levy, too, will be increased by 50% to 12c a bag from tomorrow. While the VAT hike has been widely condemned by several NGOs, trade unions and political parties, the SA Revenue Service this week announced it was ready to implement the increase announced in the Budget in February.

Karen Hofman, the director of PRICELESS SA (Priority Cost Effective Lessons for Systems Strengthening), based at the Wits School of Public Health, said she was pleased that the sugar tax would finally be in force.

“We’re pleased that the day for the sugar sweetened beverage tax has arrived. It took a year longer than we had hoped because of strong industry interference and push-back.

“The beverage industry also forced the Treasury to decrease the size of the tax from 20% to 11%. We believe this will still have an impact but won’t be as effective as it might have been.”

It was her team’s research in 2014 that determined that a 20% sugar tax could potentially shrink obesity in about 220000 adults in South Africa.

“It (the tax) sends a strong public health message. Consumption of these drinks is a significant contributor to obesity and ill health that the country can no longer afford to pay for.

“The tax will partially alleviate this burden; it is just the first step that should be followed by things like pack labelling and advertising regulations.”

BevSA, which maintains that food taxes have proved ineffective in other markets, has warned it would have an impact on the economic growth prospects of the country’s GDP and “lead us to a wave of job losses across the industry’s value chain”.

But Hofman insisted that job loss claims were a red herring “that has been wildly exaggerated to sow doubt in the minds of the unions and the public".

“The beverage industry has stated publicly that sugar is bad and they are reformulating. The impact on job losses is likely to be minimal. The critics have vested interests which are profit-driven.

“The scientific evidence is overwhelming that sugary beverages and sugar in general are a major contributor to obesity and diabetes.”

On the fuel hikes, the AA said a litre of petrol would cost about 63cents while the price of diesel could jump to 57c a litre.

The General Fuel Levy and Road Accident Fund Levy would rise on Wednesday by a combined 52c a litre, meaning substantial price increases at the pumps, the AA said.

“These increases will push the total amount of taxes paid to the levies to R5.30 a litre (from R4.78). This means around 40% of every litre of petrol is being paid to indirect taxes via fuel purchases."

Saturday Star