Treasury Deputy Director General Ismail Momoniat told this to Parliament’s Standing Committee on Finance.
“They have been talking to farmers, saying that they won’t buy their sugar, going to little stores in townships saying the tax will cost them money and … handing forms to workers, saying they will lose their jobs,” said Momoniat.
“This is damn irresponsible on behalf of a multinational. We don’t want people to lose their jobs but is up to industry to find effective substitutes to prevent any negative impact of this tax. They need to reformulate.”
Last year, Treasury proposed a taxation rate of almost 20 percent on a can of Coke. But it revised this in February, proposing to exempt the first 4g of sugar per 100ml. This means that the tax rate on a can of Coke is now around 10 percent.
Former Tourism Minister Derek Hanekom, making his debut as a member of the committee, said he was “not convinced about industry’s job loss argument”.
“What about the productivity losses and the very high health costs caused by non-communicable diseases?” asked Hanekom.
Meanwhile, Lynn Moeng, the health department’s Chief Director of Nutrition, said she was “saddened by the reduction in the sugary drinks tax”.
“It is a critical step to address obesity. The results released on the obesity rate last week showed we have increased our obesity rate again, with 70 percent of women and 30 percent of men now overweight and obese,” Moeng told the committee.
However, MPs across the board stressed that the tax alone would not reduce obesity. The DA’s Alf Lees said he had lost 23kgs in the past four years, but this had been due to “substantial lifestyle changes”.
Moeng later addressed the Health Portfolio Committee, explaining that her department was trying to address the four main drivers of obesity – poor diet, insufficient physical activity, poor early childhood feeding practices and people’s lack of knowledge.
Plans include the regulation of marketing of junk food to children and consumer-friendly labeling on foods that explained the sugar, salt and fat contents.
‘Remove vending machines’
The DA’s Wilmot James said government should “remove the Coke vending machines” from schools.
However, ANC MP Dr Patrick Maesela criticized the department’s plan. “You can provide tons and tons of tablets, but it’s not going to work. Start with the root cause and that is poverty. Obesity is a form of malnutrition. People can’t afford to buy healthy food and they can’t grow food because they don’t have the land. If I am hungry, you can’t tell me I must run a kilometre.”
Meanwhile, Finance Committee chairperson Yunus Carrim said the majority of ANC MPs from the finance and health committees supported the sugary drinks tax, as long as there would not be substantial job losses and the concerns of small emerging black cane farmers could be addressed.
Carrim said MPs needed to see Treasury’s revised socio-economic study and wanted the negotiations on the tax to be concluded in Nedlac.
Momoniat responded that the study was complete, but its results in relation to job losses were “heavily dependent on assumptions” – ranging from the beverage industry failing to reformulate its drinks to substantial reformulation.
“The Nedlac process is not as comprehensive as the Parliamentary process because there are structural issues,” said Momoniat. “The Food and Allied Workers Union (Fawu) is not there although it is the union most affected [Fawu is no longer part of Cosatu], the talks are centered on industry and the health department is not there.”
Meanwhile, Finance Minister Malusi Gigaba indicated that Parliament would soon “facilitate the implementation of tax legislation, including the tax on sugary beverages”.
* Public hearings on the Rates and Monetary Bill, which includes the sugary drinks tax, will be held on 31 May at Parliament.