Among other plans to see to the growth of the economy, the 2016 South Africa’s financial budget has with it, Gordhans plans to introduce a tax on sugar-sweetened beverages, similar to the sin taxes on alcohol and tobacco.
Finance Minister Pravin Gordhan announced his plans to introduce a tax on sugar-sweetened beverages and personal income tax relief of R5.5 billion which will focus mainly on lower and middle-income earners.
the tax on sugar-sweetened beverages will be formally introduced on 1 April 2017 in a bid to “help reduce excessive sugar intake” as governments around the world plans to reduce sugar consumption, which is linked to high instances of conditions such as obesity and diabetes.
The proposed tax, predicted to be 20 percent, was in line with the country’s need to raise additional revenue and reduce the budget deficit. If passed, this could bring in an estimated R7-billion in additional revenues each year.
South Africa is ranked the worst in sub-Saharan Africa for obesity. The country has also been ranked second in the world for deaths related to sugary drinks, below only Mexico and researchers estimated that the growth in consumption of sugary drinks by 2.4% – the rate at which sales of sugar-sweetened beverages are expected to rise – could lead to an additional 1.3-million obese adults by 2017.
According to Priceless-SA (Priority Cost Effective Lessons for Systems Strengthening South Africa), moderate obesity is associated with an 11% increases in healthcare costs, while severe obesity is associated with a 23% increase in healthcare.
It further projected that a total healthcare expenditure related to adult diabetes will cost South Africa between $1-billion and $2-billion by 2030.
The Department of Health had in 2015 declared it’s intention to reduce obesity by 10 percent come 2020 and the treasury was assisting the department in their goal with the fiscal intervention which was “increasingly recognized as complementary tools to help tackle this epidemic”.
Despite how good this may sound, the tax bill has been criticized by some opposition parties and South Africans. The Democratic Alliance (DA), has labelled sugar tax “regressive”, arguing that the sugar tax would drive up food prices and will directly affect the poor.
The group however, proposed that healthy lifestyle campaign by politicians will be the best option to tackling the non-communicable diseases that has strained the financial and human resources of health care systems.
More so, the association of drinks manufacturers Bev-SA told the Mail & Guardian recently that singling out one category of products for additional taxes was “discriminatory” and would not be beneficial to consumer health.