Australia will abolish a levy on domestic sugar sales from December 1, a year ahead of schedule, as improved world prices have boosted the outlook for Australian growers, Treasurer Peter Costly said on Thursday. Soft drinks group Coca-Cola Amatil Ltd, a major sugar buyer, welcomed the announcement, saying the levy had cost the company A$9 million ($7 million).
"It was a severe tax on our business, and came at a time when we're paying world record prices for sugar, aluminium and PET resin," the company's managing director, Terry Davis, said in a statement. The levy of 3 cents a kilogram was introduced in January 2003 and was due to remain until the end of 2007, to help pay for a A$444 million ($344 million) programme to help struggling cane farmers leave the industry.
"The levy was introduced at a time when sugar prices were low, to fund an exit and restructuring package for growers," Costly said in a statement. "The marked improvement in world sugar prices since 2003 has meant that input costs have risen for users." World sugar prices have rebounded over the past 18 months from about 8.5 US cents per pound (lb) in May 2005 to a high of about 18 cents per lb in May. Raw sugar futures on the New York Board of Trade closed marginally easier at 11.47 cents per lb on Wednesday ahead of Thanksgiving holidays in the United States.
Coca-Cola Amatil shares last traded down 0.4 percent at A$7.25, rebounding from a low of A$7.11, in a market that was up 0.4 percent.
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