Budget speech to clarify sugar tax

Budget speech to clarify sugar tax

The beverage industry, sugar farmers and health activists are anxiously awaiting clarity on the sugary drinks’ tax, expected in tomorrow’s (22nd Feb) Budget speech.

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Members of the Healthy Living Alliance demonstrate in favour of a tax on sugary drinks

The Finance Minister is expected to announce the level of tax as well as whether 100% fruit juice will be included.

In a policy paper published last year, Treasury proposed a tax of 2,29 cents per gram of sugar, which works out to be around 20 percent on a Coca Cola.

Although pure fruit juice was excluded from the tax in the policy paper, Treasury Deputy Director General Ismail Momoniat has since said that it should be included.

Treasury’s Mpho Legote said that the Finance Minister’s decision will “take into account all 144 submissions” that they had received on the tax.

“It is important to change the environment to encourage the consumption of healthier products. If the price level of sugary beverages is still cheap enough to undermine healthy options then this is a problem,” said Legote.

‘Chastised industry’

He chastised industry stakeholders who “have not helped us to find balance between job losses and the impact [of sugary drinks] on health. Industry wants to protect its purse and profit, and that is not fair.”

The Department of Health’s Lynn Moeng described the sugar tax as “one part of a multi-pronged approach to combat obesity”.

She said that the Beverage Industry of SA (BevSA) had warned of job losses but “they have not factored in the increase in sales of healthier products. For example, when Woolworths removed sweets from its aisles, it saw an increase in the sales of healthier products. 

“Industry should use the energy it is putting into opposing the tax into marketing healthy products,” said Moeng. [quote float = right]Industry should use the energy it is putting into opposing the tax into marketing healthy products.[/quote]

Between 2001 and 2015, the sales of sugary drinks in South Africa grew by over 65%. There are so many sugary drinks being sold that the volume is equal to every one of us drinking 262ml of sugary drinks per day. 

Increased obesity levels

Between 1998 and 2012, obesity grew from 30% to almost 40% in women, and from 7.5% to 10.6% in men.

BevSA and the Consumer Goods Council of SA (CGCSA), have spoken against the tax, with BevSA-commissioned research claiming the tax could result in up to 71 000 job losses

The two powerful bodies would prefer voluntary “reformulation” of products to reduce sugar content. Those opposed to the tax also want more research into the total dietary intake of South Africans.

BevSA has already used the tax to start trimming its staff, according to the Food and Allied Workers Union (Fawu). However, Mexico – which introduced a sugary drinks tax in 2013 – did not experience job losses.

Economic modelling by Wits University think-tank Priority Cost Effective Lessons for System Strengthening South Africa (Priceless) predicts that the tax will result in 220,000 fewer obese South Africans and bring in up to R7-billion in revenue that can be used to fund health initiatives.