Zimbabwe's BMA in fresh drive to ditch sugar tax

The Beverage Makers Association (BMA) has renewed calls for the complete removal of Zimbabwe's Sugar Tax, warning that the levy threatens jobs, reduces formal manufacturers' tax contributions, and erodes competitiveness in the region.

Introduced in 2024 as part of efforts to curb sugary drink consumption and combat non-communicable diseases, the tax initially stood at US$0,02 per gramme of sugar in beverages. Following an industry outcry, it was later slashed to US$0,001 — but manufacturers say the charge remains too high.

"In an extremely price-sensitive market, the industry argues that the tax has introduced an additional value chain burden in an already challenging operating environment marked by high input costs, power supply constraints, and inflationary pressures," BMA chairperson Calum Philp told businessdigest.

Philp warned that without relief, formal beverage producers could be forced to cut jobs, while the government risks losing a substantial portion of tax revenues as the market turns to unregulated imports.

The levy has also placed Zimbabwean producers at a disadvantage compared to neighbours. In South Africa, the health promotion levy applies only to sugar exceeding four grammes per 100ml of a beverage, while Botswana uses a similar threshold — both at roughly US$0,001 per gramme. Philp noted that Zimbabwe's approach makes no allowance for a baseline level of sugar deemed necessary in a healthy diet.

The industry argues that scrapping the tax could help restore domestic value chains and ease the already high cost of doing business. Manufacturers are battling steep interest rates, unreliable electricity that forces reliance on costly generators, and a heavy regulatory load.

"For many companies, this tax has become yet another obstacle to competitiveness in an already difficult operating environment," Philp said. "Beverage volumes are declining from local manufacturers due to the high cost of Sugar Tax and the opportunity for informal imports to price below locally tax-compliant products."

While supporting public health initiatives, the BMA says revenue collection should be balanced with economic growth. Philp praised the use of Sugar Tax proceeds to fund cancer treatment equipment but urged authorities to seek alternative revenue streams.

"In particular, enhancing corporate tax compliance and expanding the tax base could potentially yield greater returns without discouraging production or placing additional strain on manufacturers," he said.