Industry, Govt in talks over sugar tax

TENDAIISHE NYAMUKUNDA

Industry is in talks  with the Government  to reconsider the sugar tax currently  pegged at US$O.001/gram, which has caused a dramatic increase in  beverages  prices, it has been learnt.

 

The Confederation of Zimbabwe Industries  president , Kurai Matsheza confirmed the development.

“We are engaging  the authorities. Yes we understand  the validity of  these tax, but the increase of prices is extreme. So we are  engaging with the Government  so that  we can see ways in which prices can accomodate everyone at large,”Matsheza  said.

According to Matsheza, the unexpected increase in pricing is the result of a US$0,001 per gram additional tax on sugar, which is the cause of the exorbitant costs of goods like Mazoe Orange Crush and the majority of beverage products.

“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,”Matsheza said.

He added:”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.”

The president of the Zimbabwe National Chambers of Commerce, Mike Kamungeremu, stated that the government’s implementation of a sugar tax is to blame for the rise in the cost of goods that include sugar rather than the desire of companies or industry.

“We understand  that prices of sugary commodities  have gone up and those prices going up was never the intention  of business and industry. The  prices are going up because of the sugar tax which was introduced  by the Government, “Kamungeremu said.

He added: “From our side as a business there is nothing we can really do except incorporate the new  sugar tax into the pricing regime and the effect  is obvious  that the price has to go up.”

According to Kamungeremu, the government is trying to deter people from consuming the products while also seeking to increase income through the sugar tax, which would keep costs high.

“Government is trying to rise revenue at the same time in some cases they are actually 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, ” Kamungeremu said.

He added:” 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 are able to afford to  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. ”

Additionally, Kamungeremu said businesses have understood the intention of the Government  to raise money to assist  the economy  to grow  and the country to go forward and that  business  will still afford the products.

“As Business we have come to understand  the intentions of the Government  and we accept it, the price increases and it is our sincere  hope that the workers as we go forward will be able to still afford  the  products, “Kamungeremu  said.

He added:”To the  authorities we still hope that after collecting the  tax they  will then channel  the tax to the purposes  that  they indicated when they introduced them because it is meant to steam help the country to move forward , so this one we still have to accept the reality that is what on the ground and there is  nothing that  we can do, the  tax was introduced and we have to accept  it.”

Victor Bhoroma, an economic analyst  weighed  in saying:”The sugar tax has got a number of ramifications  on food & 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.”

He added : ” It is inevitable, the majority of already poor Zimbabweans will no longer afford their home grown 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 claims that the enterprises who produce sugary goods will be negatively impacted by the price increase because of decreased demand and competition from less expensive imports.

” 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, “Musewe said.

 

 

Related