Sugar tax: BevSA’s perspective

There is no question that sugar-sweetened drinks are detrimental to one’s health, but will Finance Minister Pravin Gordhan’s proposed sugar tax be the best way to tackle South African’s current challenge? The Beverages Association of South Africa (BevSA) thinks not. Alina Hardcastle delves into the matter further.

The association has joined forces with both bottlers and other beverage companies to speak out against the proposed sugar sweetened beverage (SSB) tax. During a press conference that took place yesterday (23 August 2016), BevSA warned the public that the supposed fiscal intervention could potentially reduce the industry’s contribution to South Africa’s Gross Domestic Product (GDP) by R14 billion which is the equivalent of 0.4% of the GDP growth in 2016.

That’s not all, BevSA adds: “The proposed SSB tax could trigger 62 000 to 72 000 job losses, hurt the South African economy, exacerbate the broader fiscal and societal costs associated with unemployment, increase the burden on consumers with 25% price increases, and damage the competitiveness of the non-alcoholic beverage industry.”

Will the tax solve SA’s obesity problem?

The proposed levy was announced in Gordhan’s 2016 budget speech with the aim to help reduce excessive sugar intake which was directly linked to obesity. But will the proposed levy act as a complementary tool to reduce this problem? BevSA says: “Tax has been shown not to be the most effective mechanism to reduce obesity.”

The group says that SSBs account for just three percent of daily calories in South Africa while the largest contributors to the rise in energy in take are calorie rich foods such as vegetable oils (105 calories or 440 KJ per day).

They highlight: “Average daily energy consumption in South Africa has increased by 191 daily calories per capita (799 kilojoules (kJ) per capita) from 1991 to 2011. As a result, adult obesity rates have grown from 22% to 27.7% over this period.”

However, the association also mentions that the consumption of added sugars has declined in both absolute terms (by 46 calories or 192kJ per capita per day), and relative terms (from 12% to 10% of total calories).

The tax will result in smaller producers to exit the market, which will reduce industry competition, resulting in a drop in government revenue by R3.1 billion per annum and increased UIF payments of approximately R0.7 billion.

Alternative measures

BevSA notes that there are a range of different policy interventions that government can use to tackle obesity.

The group says: “The 2014 McKinsey Global Institute report on obesity analysed and ranked the most effective interventions to tackle obesity.”  The report states that sugar reduction reformulation and providing smaller portion size to be the most effective interventions.

BevSA concludes: “We are committed to working with the Government to tackle the obesity problem in South Africa. We have specific plans underway to reformulate beverages, offer smaller pack sizes, expand consumer access to low- and no-calorie beverages, and invest in health education and awareness programmes; measures that we know to be effective in addressing obesity based on rigorous independent research.”