Calls to Expand Sin Taxes Gain Momentum After Treasury Raises $24 Million from Sugar Levy

Spread the love

HARARE – The Zimbabwean government has successfully collected US$24 million through the sugar tax introduced earlier this year, prompting calls to expand “sin taxes” to other products deemed harmful to public health.

Sin taxes, levied on items such as sugary beverages, alcohol, and tobacco, aim to discourage unhealthy consumption while generating revenue to strengthen healthcare services. Minister of Finance, Economic Development and Investment Promotion, Professor Mthuli Ncube, according to the state media, The Sunday Mail, recently highlighted the sugar tax’s impact while addressing parliamentarians at the 2025 Pre-Budget Seminar in Bulawayo.

“All resources mobilised from the tax are ring-fenced towards therapy and procurement of cancer equipment for diagnosis,” Prof. Ncube said. He added that the US$24 million collected from January to September 2024 has been allocated to purchasing cancer diagnostic machines and essential medicines.

Expanding Sin Taxes to Boost Healthcare

Experts have lauded the sugar tax’s success, advocating for its extension to other harmful products. Dr Prince Takuva, a public health specialist, warned of the rising burden of non-communicable diseases (NCDs) such as diabetes, cancer, and hypertension.

“Non-communicable diseases are on the rise and impose a massive burden on our healthcare system,” Dr Takuva said. “Increasing taxes on products like tobacco, alcohol, and sugary snacks can reduce harmful consumption and generate revenue for critical health services.”

He further emphasised the cost-effectiveness of preventive measures compared to treating advanced illnesses, describing sin taxes as a “win-win situation.”

Economist Ms Gladys Shumbambiri-Mutsopotsi echoed these sentiments, highlighting the fiscal benefits of sin taxes.

“Sin taxes are not punitive; they are corrective. They ensure consumers of harmful products contribute to addressing the public health challenges they exacerbate,” she explained.

Ms Shumbambiri-Mutsopotsi cited examples from countries like South Africa, where alcohol and tobacco taxes have successfully curbed excessive consumption and raised significant revenue. She suggested expanding sin taxes to include ultra-processed foods and energy drinks, which are increasingly linked to public health issues.

Concerns Over Economic Impact

However, some experts have urged caution. Business analyst Mr Tinevimbo Shava expressed concerns over the potential negative effects of sin taxes on local manufacturers, particularly in an economy already under strain.

“While sin taxes are vital, we must ensure they do not stifle innovation or lead to job losses,” he said.

Mr Shava pointed to the beverage sector’s initial reaction to the sugar tax, which started at US$0.02 per gramme of sugar before being reduced to US$0.001 after industry outcry. He proposed targeted tax relief measures to offset the impact on manufacturers, such as reducing VAT on essential raw materials or offering tax incentives for companies investing in healthier products.

Government Response

Minister Ncube also acknowledged the need for a balanced approach to expanding sin taxes. Regarding alcohol, he noted that alcoholic beverages, wines, and spirits already attract customs duty of 25 to 100 percent and a minimum excise duty of US$0.25 per litre.

“Introducing an additional tax may undermine production activities,” Prof. Ncube cautioned.

While the sugar tax’s success demonstrates the potential of sin taxes to bridge healthcare funding gaps, the government faces the challenge of balancing public health objectives with economic stability. As discussions on expanding sin taxes continue, stakeholders emphasise the importance of a well-thought-out approach that ensures both health and economic priorities are met.