Johannesburg - Government has come out in defence of the proposed tax on sweetened beverages from next year, saying that the charge was aimed at reducing a growing non-communicable disease epidemic and oral health problems.
The Department of Health said yesterday that research had shown that excessive sugar consumption was a serious public health concern worldwide, which had led to a sharp increase in obesity and associated non-communicable diseases such as diabetes, cardiovascular disease, cancer and dental caries.
The department’s cluster manager for noncommunicable diseases Professor Melvyn Freeman said the tax was also aimed at fighting the growing obesity problem in the country.
“There is good reason to believe from both local experience with tobacco and alcohol and international experiences with sugar (as well as tobacco and alcohol) that taxes are an excellent mediator of consumer behaviour,” Freeman said yesterday.
The department’s stance comes after the Beverages Association of South Africa (BevSA) yesterday warned of the dire consequences of the proposed tax, claiming that it would cost the local economy R14 billion, push the country into recession and lead to job losses.
Launching its first official response to the National Treasury’s policy paper, BevSA said the proposed tax could have devastating consequences on the economy that could leave between 62 000 to 72 000 people without jobs.
The association said beyond this, the tax could put more pressure on the already over-stretched local consumer.
“The tax would also further increase the burden on consumers with 25 percent price increases (up to 80 percent in some cases), and damage the competitiveness of the non-alcoholic beverage industry, the association said.
Last month, the Treasury recommended a levy on sugar sweetened beverages, arguing that the charge was aimed at reducing the consumption of sugar and to encourage producers and suppliers to cut the sugar content in their drinks.
Reduced profits
However the proposal has drawn the ire of the beverages industry, with Coca-Cola Beverages South Africa this week warning that it could force it to close some of its plants and reduce its profits by half.
Industry experts yesterday described the BevSA job losses numbers as exaggerated.
Efficient Group chief economist Dawie Roodt said whereas the proposed tax would lead to job losses, the numbers would not be as big as BevSA claimed.
“I believe there will be job losses, but not on a large scale as these companies are claiming. I think they are overstating the numbers.”
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Ettiene Retief, a tax specialist at the South African Institute of Professional Accountants, said there had been no reports of massive job or financial losses from countries where a sugar tax had been implemented.
Retief said the introduction of a one-peso-per-litre tax on soda and other sugary drinks by the Mexican government in 2014 saw a drop of 10 percent in the purchase of soda and other similarly taxed drinks, balanced by an increase of 13 percent in purchases of bottled water. He said manufacturers of sugary drinks also had bottled water and sugar free drinks product options.
“Doing nothing has an increased burden and cost with regards health care,” Retief said. “Let us not forget that the companies that make drinks with added sugar also make the sugar-free alternative. The beverage industry has known for many years that a sugar tax was likely to be introduced, and the various companies should have planned accordingly.”
Coca-Cola Beverages South Africa this week warned that it could be forced to close some of its plants and have its profits reduced by half once a sugar tax is imposed in South Africa.
BUSINESS REPORT