Experts call for a 20% sugar tax hike to boost health
Experts are calling for a 20% hike in sugar tax due to the health sector s ongoing battle with the COVID-19 pandemic.
Sugar tax hike
According to the
SABC, the proposal comes as Finance Minister Tito Mboweni is due to deliver the 2021 Budget Speech next week. Experts say a further increase in sugary beverages will not only result in a reduction in communicable diseases like diabetes, but it will also help support the country’s growing tax collection shortfall.
Government currently projects a R300 billion shortfall in revenue in this year’s budget. However, experts say a significant shortfall in the region of R250 billion is still on the cards. They add that the government has lost out on sin tax collections due to the ban on alcohol and cigarettes sale during the lockdown.
Rich South Africans could be hit with higher taxes next week
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Government will likely be tempted to increase the marginal rates of tax of top earners in the budget being tabled next week – but non-tax measures would be more effective in raising funds for the fiscus.
This is the view of tax experts at legal firm Webber Wentzel who noted that even before the onset of Covid-19, South Africa suffered from three serious social challenges, namely inequality, poverty and high levels of unemployment.
“Coupled with the economically crippling and seemingly unending Covid-19 regulations, looting of state coffers and bureaucratic paralysis within SARS’ collection function, this has created a desperate situation for National Treasury,” Webber Wentzel said.
The South African government is likely to be tempted to increase marginal rates of tax on top earners in the February Budget, but non-tax measures would be more effective in raising funds for the fiscus Even before the onset of Covid-19, South Africa suffered from three serious social challenges, namely inequality, poverty and high levels of unemployment.
The solution to South Africa’s debt sustainability is to reduce borrowing costs by containing expenditure and boosting growth through structural reforms.