Johannesburg - The sugar cane industry has lamented job losses that will likely occur as a result of the tax on sugary drinks passed by Parliament on Tuesday.
The National Council of Provinces (NCOP) passed the tax which forms part of the Rates and Monetary Amounts and Revenue Law Amendment Bill.
This marks the end of 18 months of negotiations on the tax, that included four public hearings and a negotiation process in Nedlac. The tax, due to be implemented on 1 April 2018, will see the price of a can of Coca-Cola increase by around 11 percent.
“We applaud Members of Parliament for putting the health of millions of South Africans before the narrow interests of the beverage and sugar industries,” said Tracey Malawana, coordinator of the Healthy Living Alliance (HEALA).
“Thanks to Treasury and MPs, South Africa is on the right path to reverse the alarming numbers of diabetes cases and other NCDs associated with obesity. We now look to the President to sign this important law without delay."
But the South African Sugar Association (SASA) said the extent of the impact that the levy will have on the industry has been articulated in a study by the Bureau of Food and Agricultural Policy (BFAP), commissioned by SASA.
"Based on the assumption that the HPL will result in a 200 000 ton reduction in demand for sugar, BFAP concluded that there would be a 13 200 hectare loss in cane production with an estimated 3129 jobs being lost. The cane area reduction will take place mainly in the Coastal production regions with small-scale growers and small commercial growers going out of production first," SASA nutrition manager Priya Seetal said.
She added the low world price for sugar, inadequate tariff protection and the rising input costs added to a bleak outlook and with the additional impact of the levy, sugar mills would have to close in the Coastal production regions, resulting in a loss of over 20 000 direct jobs (farm and mill) in the next five to seven years.
This she said would negatively affect the livelihoods of over 90 000 people.
SASA also holds the view that the sugar industry would be adversely affected by the tax as there is no alternative for the use of sugar in South Africa, apart from consumption.
"The curbing of imported sugar will significantly reduce the impact of the tax. The duty paid on imported sugar is minimal and offers little protection from the import of cheap sugar. This displaces the demand for sugar produced in South Africa," Seetal said.
Although SASA has made submissions to Parliament against the tax requesting that a credible study is conducted to determine the socio-economic impact of the tax as well as for a national study to determine what foods are contributing to obesity, it added it as not considered the option of appealing the Bill.
Initially, Treasury proposed a tax of around 20 percent on a can of Coca-Cola. However, the current tax will impose 2.1 cents per gram of sugar on all sweetened drinks, with the first 4g of sugar per 100ml exempt as an incentive to encourage industry to reformulate its drinks to reduce their sugar content.
South Africans are among the top 10 consumers of sugary drinks in the world, and research has shown that drinking just one sugary fizzy drink a day increases the chance of being overweight by 27% for adults and 55% for children. Diabetes alone claimed more than 25 000 lives in 2015, and public health facilities reported seeing 10 000 new diabetes cases every month last year.
“While the tax is a victory for public health, it is around 11 percent on a can and we would like it to be strengthened to 20 percent to really deter people,” said Malawana. “We will also be monitoring how the proceeds of the tax are used to ensure that government uses the money for health promotion.”
Over 30 countries worldwide are taxing sugary drinks, and South Africa joins Portugal, India, Saudi Arabia and Thailand who have passed similar taxes this year.