Australian sugar tax remains in new budget

The country's food and grocery association said it was disappointed that the government did not to remove the 3 cents per kilo tax on sugar in Australia, brought in at the beginning of 2003 to help sugar producers hit by a downturn in world prices and tough weather conditions .

But with the current turnaround in pricing, food companies believe the government no longer needs to give concessions to the sugar industry.

"Food and beverage producers already have to face a doubling of the world price for sugar, and increased fuel and packaging costs,"​ said AFGC chief executive Dick Wells.

"The sugar tax is a compulsory financial penalty imposed by a government to raise revenue to help pay for assistance that is not being fully used."​

Wells said that the tax has been complex and inefficient to administer and was aimed at helping one sector of the economy at the expense of another.

"Ultimately all participants in the food supply chain are penalised by the tax, including growers. Such taxes hurt and reduce the competitiveness of one of Australia's key industries,"​ he said.

The association argues that removing this tax at a time of significant Budget surpluses would make Australia's food and beverage manufacturers more competitive.

"While overall the government should be commended for the significant taxation and infrastructure initiatives announced in the budget, the failure to remove an unnecessary tax on businesses is a missed opportunity,"​ said AFGC chief executive Dick Wells.

"At a time when companies are absorbing significant increases in input costs, it was a realopportunity to remove this damaging tax and assist one of the most valuable manufacturing sectors."​

The Budget did offer some positive aspects for industry, such as additional tax deductions for business purchases of physical assets like computers and machinery.

The government also announced a freeze in heavy vehicle charges and plans to upgrade rail and road infrastructure.