Business and Technology

Industry engages government over sugar tax

Captains of industry are in talks with the Government to reconsider the sugar tax currently pegged at US$0.001/gram, which has resulted in a sharp rise in beverage prices.

Speaking to Business Times, Confederation of Zimbabwe Industries (CZI) president, Kurai Matsheza confirmed the ongoing engagements. He said:

We are engaging the authorities. Yes we understand the validity of these taxes, but the increase of prices is extreme.

So we are engaging with the Government so that we can see ways in which prices can accommodate everyone at large.

There is an added tax on sugar which is US$0.001per gram and due to that tax producers of sugary products to cater for it, prices have to go up and you have seen prices of products like Mazoe Orange Crush and Beverages products they have gone up as a way of covering the US$0.001/gram tax which was put in place.

This will only mean that manufacturers of beverage products will lose market share, their volumes will go down because the consumers will not afford to purchase for the products and this will even force them to produce very few products hence a downturn in business.

Zimbabwe National Chambers of Commerce (ZNCC), Mike Kamungeremu, said there is nothing they can do except factor the new sugar tax into the pricing of products. He said:

Government is trying to raise revenue at the same time in some cases they are trying to discourage consumption of the same products, where you then say prices are going to come down, but prices are not going to come down regarding those items except if the tax is reduced or removed.

But as it stands because the tax has already been introduced it means those prices will now stay where they are and what we then anticipate to see is probably a reduction in their consumption or probably workers getting more so that they can afford them, but the truth of the matter is that the tax has been introduced and the prices have already gone up so it is a reality that we have to live with.

An economic analyst Victor Bhoroma warned that the sugar tax will make Zimbabwean products less competitive on foreign markets. He said:

The sugar tax has several ramifications on food and beverages in the country. Sadly, a noble cause to raise tax revenues has a direct bearing on the cost of production, cost of produce, final prices, and food consumption patterns.”

It is inevitable, that the majority of already poor Zimbabweans will no longer afford their homegrown renowned brand.

It speaks to the impact of taxation and monetary regulations on the competitiveness of local products. We are pricing ourselves out of a few export markets we were left with.

Economist Vince Musewe said the sugar tax is a misinformed policy that ignores the social impact. Said Musewe:

This sugar tax is a mere means to collect more taxes and not about health. We will see reduced demand for affected products and cheaper imports which works against the imperative to industrialise while stifling local companies that are producing drinks. For me it’s a misinformed policy that ignores social impact.

Earlier this month, Finance, Economic Development, and Investment Promotion, lowered the sugar tax from US$0.002 to US$0.001 per gramme of sugar.

Ncube had announced the 0.002 cents per gramme in the 2024 national budget statement in November 2023.

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