A tax on eggs just jumped by 50% – but producers say you probably won't pay more
- As of Friday, egg producers and importers must pay a 1.5c per dozen levy on all eggs for domestic consumption, up from 1c per dozen paid, voluntarily, by some producers.
- They money will mostly be used for marketing, with some going to transformation.
- The SA Poultry Association does not expect the tax to show in on-shelf prices consumers pay.
From Friday, all table eggs sold in South Africa carry a new tax: a levy of 1.5 cents (or R0.015) per dozen, due to be spent mostly on "consumer communication and education".
But for many producers the 1.5 cent levy replaces a voluntary contribution of 1c per dozen, the SA Poultry Association told Business Insider SA, so although it represents a 50% increase, it remains so small that the industry "does not expect that the implementation of the levy will impact on egg prices.
The tax amounts to about 0.1% of a regulatory guideline price for wholesale eggs, but is closer to 0.09% of the average shelf prices recorded by Statistics South Africa for 2017, after a nearly 12% increase in prices during the year.
Based on 2017 numbers, the total tax should amount to around R9 million, in an industry likely to have revenues of well over R15 billion.
At least 20% of the money the tax brings in must be used for transformation initiatives, in an industry often criticised for lacking significant black economic empowerment.
The bulk of the money, however, an anticipated 70%, will go to marketing and education aimed at consumers, and research.
After four years any money not spent on such initiatives will become available for the minister of agriculture to spend as he or she sees fit.
The levy is due to increase by a fraction of a cent every year, to reach 0.18 cents, or R0.018, during 2021.
It applies to all table eggs, or non-fertile eggs for domestic consumption, and so will be paid by both local producers and importers.
A special transformation committee will consider sustainable transformation projects using the new funds, the Poultry Association said.
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