Politicians aid industry in dirty war over sugar tax
For over 18 months, the sugar and beverage industries have had the help of politicians to wage war against a proposed tax on sugary drinks in a microcosm of all that is rotten in this country. But the fight is not yet over.
In Colombia, activists proposing a tax on sugary drinks have been harassed and physically threatened. In Mexico, their mobile phones were infected with spyware developed by the Israeli government. But in South Africa – nothing.
The beverage and sugar industries didn’t need to bother with the small but vocal group of activists aligned to the Healthy Living Alliance (HEALA) who were in favour of the tax. Instead, they went directly to politicians, especially those with bendy backbones and open pockets.
But Yunus Carrim, chairperson of Parliament’s Standing Committee on Finance, didn’t bend. And last week, he stood up in Parliament and revealed that he had received threatening phone calls from people linked to industry, telling him to drop the tax (now called the Health Promotion Levy) contained in the Rates and Monetary Amounts and Amendment of Revenue Laws Bill.
“There were various interventions, including as late as last night, to get us to drop this Bill. And of course it comes from people to are connected to the industry,” said Carrim
Shortly after Carrim’s speech, the National Assembly passed the Bill, which also contains the all the changes to income tax and excise duties announced in the February Budget and it was referred to the National Council of Provinces (NCOP).
NCOP’s ‘unusual move’
As it is a money bill, the NCOP can delay but not prevent the passing of the Rates Bill – and it has done just that. The ANC’s Charel de Beer, chairperson of the NCOP’s Select Committee on Finance, has quietly allowed the Beverage Association of SA (BevSA), which represents Coca Cola and most sugary drinks owners, and Tiger Brands to make presentations to his committee tomorrow (Tues 28th). The NCOP will then vote on the Bill during the last week of Parliament, and if it proposes any amendments, these will have to go back to the National Assembly next year.
“Allowing only the losing side of the contested Health Promotion Levy to make a submission to the NCOP Select Committee on Finance is a most unusual move,” said Gaile Fullard, Executive Director of the Parliamentary Monitoring Group.
“One could call it a hijacking of the legislative process for this Bill as there have never been hearings on tax bills in the NCOP. It will be interesting to watch this play out – to see if there is a sudden change of mind by a majority in the Committee. Any NCOP amendment would mean it has to go back to the National Assembly for approval.”
De Beer failed to respond to questions about whether he had been under pressure from ANC heavyweights to allow industry representatives into his committee or received any financial offers or rewards from the industry.
Wrong for politicians
Tracey Malawana, co-ordinator of HEALA, was furious about De Beer’s decision: “I have protested to the chairperson and told him that we will also be coming to his committee and we also demand the right to present,” said Malawana. “Sugary drinks are killing our people. The beverage industry has a lot of money to market their products and influence politicians. But diabetes, hypertension, heart attacks, strokes and cancer are all increasing because of poor diet, especially sugary drinks.”
De Beer is likely to have fallen victim to the same people who tried to get Carrim to drop the levy. Carrim confirmed to Health-e that the people who had been trying to get him to drop the tax were well-known, but he wouldn’t name them: “It’s unfortunate that senior politicians with business interests or linked with those with business interests in the industry constantly tried to stop the Bill going ahead,” said Carrim.
“It is just wrong for politicians to try to shape legislation to serve their own business interests or those of businesses they’re connected with. The ANC is very clear about this, but needs to act more decisively against those who transgress. And most of those who intervened were so predictable.”
Initially, it looked as if industry would follow the same game plan in South Africa as in other countries that have introduced the tax – sponsoring researchers, journalists and fake community organisations to oppose it.
Leaked Coke emails
Leaked emails show that Coca Cola views a sugar tax as one of the biggest threats to its business. Hamish Banks, Vice-President of Public Affairs and Communication for Coca Cola Eurasia and Africa, outlined Coke’s three-point “fight back” messaging strategy in an email on 18 April 2016 as: “Taxes don’t work in solving obesity challenges; They have unforeseen economic and societal impact; The industry is already taking steps to mitigate the consumption of excessive amounts of sugar through packaging, reformulation, and active promotion of lower calorie variants.”
This was the script followed by industry and its allies in South Africa, with particular emphasis on job losses. In September last year, an economic research organisation, Oxford Economics, released an alarming report commissioned by BevSA which claimed up to 72,000 jobs would be lost if the tax was introduced.
At a consultative meeting called by Treasury in early November 2016, members of the Tshebedisano Support Network, an Alexandra-based organisation of small businesses, and the Free Market Foundation’s Leon Louw, turned up wearing the same anti-tax T-shirts. An emotional Silas Hermans from Tshebedisano threatened mass marches in KwaZulu-Natal, the heartland of sugar farming. The sugar and beverage sectors were there in full force, supported by McKinsey
In December, Fin24 exposed the fact that Coca Cola had paid the Institute of Race Relations to produce research questioning whether the tax would work.
Anti-tax blogs and articles started to appear, mostly in the business pages, and BevSA placed anti-tax advertisements in national newspapers. Meanwhile, Coca Cola spent around R170-million on marketing in 2016.
But in 2017, the industry’s appetite for public mobilization waned, as it turned its attention to lobbying key policy makers. From early 2017, Carrim and Lindelwa Dunjwa, chair of the Portfolio Committee on Health – both members of the Central Committee members of the SA Communist Party (SACP) – facilitated one of the most extensive consultations on a proposed tax that South Africa has ever seen. There were four parliamentary hearings plus an extensive negotiation process in the National Economic Development and Labour Council (Nedlac).
[quote float = right]But a concerted attack on the tax was being organised from within the ANC itself, led by MPs Pinky Kekana and Peace Mabe, with the ANC Women’s League as the battering ram.”
“We were excruciatingly aware of the need to reduce job losses and the impact on emerging African cane-growers, and we sought to find balances between these interests and the health interests of the country,” explained Carrim. “We had extensive public hearings both before the Bill was brought to Parliament and after, and referred the matter to Nedlac to seek to reduce the differences among the contending stakeholders, and we allowed people to engage with the issues, as our Committee usually does, until shortly before voting in the Committee on it.”
Even Cosatu was relatively satisfied, with official Matthew Parks saying that “this is the first time that a tax has been negotiated at Nedlac”.
Attack on tax led by ANC MPs
But a concerted attack on the tax was being organised from within the ANC itself, led by MPs Pinky Kekana and Peace Mabe, with the ANC Women’s League as the battering ram. Kekana, a member of the ANCWL Working Committee, has never hidden her opposition to the tax. At the final finance committee meeting on the matter a few weeks back, she could barely contain her anger after the committee had voted that the Bill was ready to be sent to the National Assembly for the vote.
Kekana has a history of using her position to facilitate favours. While she was Transport MEC in Limpopo, her friend Julius Malema (at the time ANCYL President) scored tenders worth millions of rands from the transport department. Public Protector Thuli Madonsela found that Kekana had “acted improperly” after she had arranged for a traffic officer to arrest one of Malema’s rivals but she was never investigated for facilitating Malema’s tenders.
Meanwhile, Mabe, an apologist for both Jacob Zuma and Dudu Miyeni, was ordered out of the National Assembly last year after it was found that she had been sworn in as a councillor in Mogale City in Gauteng without resigning as an MP.
On May 30 – the night before a parliamentary hearing on the tax – the ANCWL jumped into play, issuing a statement calling for the tax to be withdrawn.
Coke’s BEE offer
“Government must look at other mechanisms such as instructing sweetened beverage companies to reformulate their products and reduce the sugar content,” said ANCWL General secretary Meokgo Matuba. “The fight against obesity and non-communicable diseases must be intensified but not at the expense of job loss and economic marginalisation of black people who are in sugarcane growing sector and milling industry”.
A few weeks later – and two days before the start of the ANC’s national policy conference on 30 June – Coca-Cola Beverages SA (CCBSA) announced that it was committed to increasing its black economic empowerment (BEE) stake to 30 percent by 2021 and would engage with local partners who might be interested in a multimillion rand stake.
At the ANC policy conference, Kekana was instrumental in persuading the Economic Transformation Commission to recommend that the tax be scrapped on the basis that it would cost jobs and undermine transformation. Health Minister Aaron Motsoaledi and MP Thandi Tobias had to intervene from the floor during the plenary to reinstate the party’s support of the tax as part of government’s plan to cut obesity by 10 percent by 2020.
Tobias, a former deputy minister during Thabo Mbeki’s presidency, has diabetes herself and was a vocal supporter of the tax in the finance committee. At one meeting, she chastised MPs who did not support the tax, reminding them that they were not the ones that had to queue for hours at government clinics to get their chronic medication.
Derek Hanekom, who joined the finance committee after being removed as Tourism Minister, has also been a vocal supporter of the tax, and at one stage remarked: “You don’t try not to reduce car accidents just because tow truck drivers are going to lose their jobs”. ANC MPs in the Portfolio Committee on Health have also generally strongly supported the tax.
But South Africa is at the start of a massive epidemic of non-communicable diseases and – as at the start of the HIV epidemic – many policy makers cannot yet seem the health crisis we are in, despite the fact that diabetes has become the biggest killer of South African women.
However, Treasury’s Deputy Director General Ismail Momoniat and senior economist Mpho Legote were persuaded of the importance of the tax some years back, when presented with solid evidence from PRICELESS, a health economics think-tank based at Wits University, that this is the most cost-effective intervention to curb obesity.
Obesity-related diseases have skyrocketed over the past few years, with medical aids reporting a 68 percent increase in diabetes just in eight years, and public health clinics reported seeing 10,000 new diabetes cases every month in 2016.
Tax is inevitable
Submissions to parliament from health academics were unanimous about the ruinous effects of a diet high in sugar on the health of South Africans. This even prompted the DA’s Wilmot James, then shadow health minister and firmly pro-industry, to declare that the academics had “colluded” – clearly misunderstanding the evidence-based nature of science.
Even industry – bar one lonely sugar industry representative – admitted that diets high in sugar were unhealthy and that obesity was a serious problem.
Despite the NCOP’s clumsy delaying tactics, it is inevitable that the tax on sugary drinks will eventually be passed by Parliament. But there is yet another hurdle: President Zuma has to sign the Bill into law and his susceptibility to business “persuasion” is well documented.
However, government is also desperately short of cash so Zuma might see the revenue as yet another cash cow to be milked. If the Health Promotion Levy does get implemented on 1 April 2018 as Treasury plans, civil society will need to monitor whether the proceeds actually do get spent on health promotion. – Health-e News.
* BevSA failed to repond to any questions about its lobbying tactics, including whether it had paid MPs to support the tax. Kekana and Mabe also failed to respond to queries about whether they had received any financial support or offers for their lobbying efforts.