SA Sugar Tax: Here’s How SA Will Be Affected By It


SA sugar tax: The move to impose a tax on sugar to curb lifestyle diseases in the country is still on the way as the government is taking necessary measures to cut down sugar consumption.

The state’s parliament was on Tuesday, briefed on the pros and cons of the SA sugar tax with Professor Tolu Oni‚ from UCT’s School of Public Health‚ telling the joint meeting of Parliament’s health and finance committees that statistics showed that the global average of Coca-Cola products consumed per person per year was 89 and South Africa stands as one of the highest consumers of sugary products so far.

Oni further explained to the parliament that in South Africa in 2010‚ this number was 254. It had risen considerably since 1997‚ when this number was 175.

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South Africa had the second highest consumption of sugar-sweetened beverages among children aged nine to 10 in the world‚ second only to the United States‚ says Dr. Sundeep Ruder‚ representing the Society for Endocrinology‚ Metabolism and Diabetes‚

The Government has, however, proposed a 20 percent tax on sugary drinks from April, in a bid to curb the country’s high obesity rate as was recommended by health bodies.

Dr. Sundeep Ruder made it clear that SA was the most obese nation in Sub-Saharan Africa with 70% of women and 40% of men being either obese or overweight.

Well, while a growing number of South African businesses support the SA Sugar Tax, economists look at the negative implications of the move.

Looking at the negative side of the SA sugar tax, the National Treasury said on Tuesday that formal businesses selling carbonated sugar drinks are estimated to suffer an R1.4 billion loss in revenue, and add to the country’s unemployment rate, should a “sugar tax” be implemented.

Again, senior manager of exercise at Deloitte South Africa, Pieter Marais warned the government that though its move to curb obesity rate in the country is a welcome idea, the tax might not be effectual because:

  • Similar taxes implemented elsewhere in the world have shown little impact on its intended goals (for health and consumption); and
  • The current draft tax laws give little to no incentive for companies to actually comply.

World Health Organization (WHO) decided not to endorse recommendations to impose a soft drinks tax during the executive board’s assessment of proposed cost-effective interventions or “best buys” to address non-communicable diseases (NCDs)

The Beverage Association of South Africa (BevSA) supported WHO saying more research needs to be conducted before taking the move.

“BevSA has repeatedly called for more in-depth research before implementation of any tax and contends that a tax on SSBs is not the most effective way to tackle South Africa’s growing obesity levels,” says BevSA executive director, Mapule Ncanywa.

More to it, citizens raised concerns that the money raised by the SA sugar tax will be added directly to the fiscus instead of being directed towards education programs about the danger of sugar and lifestyle diseases.

“Based on reported figures, it is expected that, at the initially proposed levy rate and at current sugar-sweetened beverage consumption levels, at least R4 billion in public revenue will be received by SARS per annum through this levy,” Marais said.

“From a public interest perspective, the public revenue it generates should be applied exclusively for specific sugar-consumption-curbing and lifestyle disease awareness initiatives.”

Finance Minster Pravin Gordhan announced in the 2016 Budget Review speech that the money gathered from the tax would be geared towards addressing most of the country’s economic challenges. He added in his speech that the said plan would kick off on 1 April 2017.

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Ncanywa said BevSA supported the idea that the intake of sugar to the daily diet should be moderated and that education about good eating habits, among others, was vital. But he warned that the tax is unlikely to actually curb South Africans’ sugar consumption, but will severely hamper the industry in the country, resulting in possible job losses.