South African Beverage Sector Says Government’s 20% Sugar Tax on Soft Drinks Would be Unfair and Unworkable

12 Jul 2016 --- South Africa could levy a 20% tax on sugary drinks in a bid to curb obesity-related diseases and unhealthy diets, but the move has angered the country’s beverage industry which brands it ‘discriminatory’.

The proposed sugar tax was announced by the South African Treasury recently as a way to tackle the country’s increasing problems with obesity-related illness, which in part it blames on sugar consumption.

The government says South Africa’s obesity problem has grown over the past 30 years, resulting in the country currently being ranked as the most obese in sub-Saharan Africa.

According to a statement, the Treasury says ‘fiscal interventions such as taxes are increasingly recognized as effective complementary tools to help tackle the problem of negative externalities’, such as the obesity epidemic.

Meanwhile, the Beverage Association of South Africa (BEVSA), which has members including Coca-Cola, Pepsi Inc and SABMiller, claims the plan is bound to fail.

“We are extremely disappointed by the budget announcement of a discriminatory tax on sugar-sweetened beverages. If the Minister’s indicated intention is to ‘curb excessive sugar intake’ then the evidence, from other markets that have taken this path and adopted such measures, indicates that this initiative will surely fail, as we have seen,” says a BEVSA spokesperson.

“There is a mountain of data showing that taxing one small part of consumers’ daily diet, sugar-sweetened beverage represents less than 10% of daily caloric intake will not result in any significant decrease in overall sugar consumption."

“The recent ITAM on the tax on sugar-sweetened beverages in Mexico, for example, revealed a minimal reduction of actual calories consumed."

“When accounting for the real-world substitution of other foods containing sugar, experts estimate a maximum reduction of six calories realized in the daily diet.”

The National Treasury has published for public comment a Policy Paper and proposals on the taxation of sugar sweetened beverages. It is inviting people to comment by 22 Aug 2016 and is available at www.treasury.gov.za. 

The South African government initially started muting the possibility of a 20% sugar tax earlier this year when the Minister of Finance made an announcement in his 2016 Budget, following on from work started by the Department of Health.

The DoH has already developed a Strategic Plan for the Prevention and Control of noncommunicable diseases (NCDS). According to government statistics, more than half of South Africa’s adults are overweight, with 42% of women and 13% of men obese.

“These strategies set an ambitious target of reducing obesity prevalence by 10 percent by 2020. This strategy has identified a number of measures to address NCDs, and more especially unhealthy diets."

“Amongst these measures taxes on food high in sugar are potentially a very cost-effective strategy to address diet related disease."

“The proposed tax thus comes against the backdrop of a growing global concern regarding obesity stemming from overconsumption of sugar. Obesity is a global epidemic and a major risk factor for the growing burden of NCDs including heart diseases, diabetes and some cancers.”

South Africa would follow other countries including Finland, France, Hungary, Ireland, Mexico, Mauritius and Norway, which have all levied taxes on sugar sweetened beverages. Meanwhile, the UK, Thailand and Australia have recently announced their intention to introduce a similar tax as part of a package of measures to tackle obesity and the excessive intake of sugar.

by Gaynor Selby