Sugar Tax: BevSA and Treasury to Meet

sugar tax
The proposed sugar tax on sugary drinks will be discussed by the Treasury and the SA beverage industry body when they meet next week, said a top official yesterday.

Finance Minister Pravin Gordhan proposed a sugar tax on sugar-sweetened beverages, such as soft drinks, energy/sports drinks, fruit juices, ice tea, vitamin waters, cordials, lemonade and squashes in his February budget speech.

The purpose of the tax would be to tackle obesity and improve public health, while raising additional revenue. The sugar tax would be implemented on 1st April 2017 if passed, though Gordhan did not specify how much it would be. It is predicted the levy will be 20%.

The Beverage Association of South Africa (BevSA) stated on its website that a sugar tax would be ‘discriminatory’ and would almost certainly fail. Members of BevSA include SABmiller, Pepsi and Coca Cola.

Executive Director of BevSA Mapule Ncanywa announced “We are meeting Treasury next week Thursday 21st and only after this meeting will we know the details of the proposed tax.”

Sugar Tax Hurts the Poor  

Ncwana said the sugar tax would only hurt the poor, as it had done in Mexico.

After the budget speech, Ncwana commented “We are extremely disappointed with the announcement of a discriminatory tax on sugar-sweetened beverages. If the minister’s indicated intention is to ‘curb excessive sugar intake’ then the evidence – from other markets that have taken this path and adopted such measures – indicates that this initiative will surely fail, as we have seen.”

Ncwana contended that sugar-sweetened drinks represent only a small part of consumers’ diets – below 10% of daily caloric intake. He argued that mounting data indicated that sugar taxes did not result in substantially reduced overall sugar consumption.

“The soft drinks industry has shown itself to be a willing and active partner in addressing the scourge of obesity and excessive consumption of sugar,” said Ncwana.

Health Foods Option Forum

The beverage industry has taken practical steps to educate consumers, after recent Health Foods Option Forum meetings. The forum includes more than 40 food and beverages industry players and the Department of Health.

BevSA said it would be actively promoting low and no-calorie soft drink options, marketing zero options to children specifically. The industry said it would also be conducting a national calorie intake study to gather real data about consumer behaviour.

This data would inform further initiatives aimed at reducing excessive sugar consumption.

Head of communications at Coca Cola, Zipporah Maubane said that South Africa’s beverage companies had agreed to react as an industry, under the title of BevSA.

“This is a sugar-industry matter and at this point we would prefer not to make any further comment,” said Illovo spokesperson, Chris Fitzgerald.

“With regards to the proposed tax on sweetened beverages, the sugar industry will engage closely with the government to understand its thinking and its intentions. The sugar industry promotes a healthy-balanced lifestyle and supports the fight against obesity,” said Fitzgerald

The Scourge of Obesity

Many countries have imposed a sugar tax on sweet drinks to curb obesity and raise additional revenue. In February, Britain announced it would be introducing a sugar tax on sweet drinks in two years’ time to abate the scourge of obesity.

Resolution Health Medical Scheme is on board with Gordhan’s sugar tax. Principal Officer of the scheme, Mark Arnold referred to the study conducted by University of Washington’s Institute for Health Metrics and Evaluation. It revealed that 70% of women and 40% of men in South Africa were obese or overweight.

“With concerns growing over the obesity rate in South Africa, and many associated non-communicable lifestyle diseases on the rise, the notion of a tax on sugary drinks is a welcome development,” said Arnold.

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