Revenue is not the major objective of the proposed tax on sugary beverages, according to Mpho Legote who is a director for VAT, Excise Duties & Sub-National Taxes at the Treasury.
The beverage industry howvever do not agree with this and are fighting the introduction of sugar tax saying that it will surely cripple the already fragile economy. But Legote says that the proposed tax on sugary beverages is not motivated by revenue raising objectives but rather for health promotion, disease prevention and addressing obesity problems.
Althought sugar tax has not yet been implemented, their is still commitment in the decision to follow through.
He goes on to say, “If the intention was just about raising revenue, there are other options such as providing limited relief for fiscal drag, increasing marginal personal income tax rates, introducing a new personal income tax bracket, raising the VAT rate and/or increases in other taxes that would have been considered”
“I think an overall VAT increase on VAT will have a much harsher impact on the poor as opposed to a tax on sugary drinks,” said Keith Engel, chief executive officer of the SA Institute of Tax Professions
