Mthuli Ncube defends proposed sugar tax

Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube has defended the proposed tax on high sugar content beverages, saying the revenue generated will go towards creating a cancer fund.

Addressing a press conference at the ongoing International Conference on Aids and STIs in Africa (ICASA) in the capital on Wednesday, Professor Ncube said after realising that HIV has got co-existing conditions, which turn out to be non-communicable diseases such as cancer, cardiovascular issues among others, he saw it necessary to fund the response to these co-morbidities.

He said as a result, last year his Ministry introduced some taxes on cigarettes and alcohol which are also going towards cancer treatment.

"This year, I have introduced an additional tax on sugar drinks and currently the figure is 2 cents per gram of sugar in a can of Coca Cola. Of course there is an outcry from manufacturers saying it's too expensive and all that, but the principle is clear, we want to create a cancer fund.

"That's where we are going with this, and that's a very noble thing to do where we link taxes on sugar to the creation of such a fund," he said.

Prof Ncube said as a Ministry, they will continue innovating in that area to make sure there is support for the HIV response as well as other innovative ways to finance the whole non-communicable diseases space.

He said a few years back he proposed the launch of a health bond, whereby when there is an income strength that can be ring-fenced, for example the 2 percent levy from sugar that is guaranteed quarterly when companies pay their taxes, the income stream becomes very clear as you can go into the capital markets to borrow against it.

"So you have an immediate shot in the arm, the money comes in now, but you then service the interest on those borrowings using the levy. Those are some of the innovations that we will be exploring going forward," he said.

Apart from allocating 14,3 percent of the national Budget to the health sector, Prof Ncube said the Government has been borrowing to support infrastructure development and currently there is an arrangement with a United Kingdom-based company, where they are building thirty polyclinics across the country and six state-of-the-art rural district hospitals.

"These are really high quality facilities, but it's a polyclinic, it's not a large hospital, but is of the highest quality. So we are making sure that there is some infrastructure development that is supporting the health sector response beyond just normal budget," he said.

Prof Ncube added that they have also borrowed from the private sector and some South African banks and raised a guarantee to enable the transaction to be completed from the Export Credit Guarantee Agency under that country's government.

He said by spending money on health, it is not just expenditure, but investment in human capital, adding that as a country, investment on health has been growing every year, highlighting that the pre-2020 budget was 7 percent of total revenues before shifting gear thereafter to above 10 percent.

For the 2024 Budget, he said Treasury has allocated $6,311 trillion out of a Budget of $44,012 trillion, which translates to 14,3 percent of the National Budget being allocated to the Health Ministry.

"That is very close to the 15 percent target from the Abuja Principle.

"We are almost there, so we are compliant with the Abuja Principles. That is the right thing to do as investment in health is investment in the economic activity in the first place," said Prof Ncube.