06 Sep 2016 OP-ED: Sugar tax will have negligible impact on public health
The Daily Maverick’s intrepid ‘BS’ detector, Ivo Vegter (above) writes:
“The beverage industry was in full force in Sandton this week, fuming about government’s proposed tax on sugary drinks,” reported Gill Gifford for the Health-e News service in Daily Maverick. “But government is standing firm, saying it has a duty to protect people’s health.”
A question few people appear to have considered is whether a tax on sugary drinks will actually protect people’s health.
Writing in Daily Maverick, Africa Check cherry-picked two of the industry’s claims to “fact-check”. It examined the claims that sugar-sweetened beverages (SSBs) account for only 3% of daily calorie intake in South Africa, and that lower sales volumes could cost the country between 62,000 and 72,000 jobs.
The reason for choosing the latter claim is simple: it smacks of exaggeration, it refers to gross job losses in the non-alcoholic beverage industry rather than net changes in employment resulting from shifting spending patterns, and it can a priori be declared “unproven” because it makes a prediction about the future.
Why the 3% claim was chosen is more of a puzzle. Africa Check rated it “misleading”, even though it does not find it to be substantially wrong. Its own calculations lead it to conclude that SSBs account for 3.2% of an average male’s energy intake and 3.9% of that of a female. But even if you round up, to 4%, the beverage industry argument that SSBs account for only a small fraction of our daily energy intake holds up. The reason why Africa Check finds it misleading is because it is an average which actually represents a range of SSB consumption, so there may indeed be people who drink too many sugary drinks for their own good. This is hardly a grand revelation, nor is stating the average misleading.
The Health-e piece quoted a rather hysterical-sounding health minister, Aaron Motsoaledi, telling PowerFM radio: “In fact, they even said the GDP would be reduced and that the economy would collapse.”
No they didn’t. They warned of job losses, not of a reduction in GDP, or an economic collapse. Motsoaledi went on to refer to “people making mega bucks”, in an attempt to harness popular distrust of profit-making private enterprise. Then he called them “economic hitmen who, to protect their own mega-profits, use the poor to assassinate themselves”. Within a paragraph, his crude exaggeration and name-calling degenerated into incomprehensible nonsense.
This kind of bombastic rhetoric does not give one much confidence that the government has a strong, rational case to support a tax on sugar-sweetened beverages. And upon investigation, it turns out that it doesn’t have much of a case at all. Amid all the industry-bashing, Treasury is simply assumed to be acting in good faith, while industry is assumed to act in bad faith.
So let us, for the sake of this argument, put aside Motsoaledi’s insulting caricature of the private sector as pathological liars trying to protect their mega-profits at the expense of the poor. Let us, instead, consider the government’s proposal purely on the merits cited by government itself.
But before we do that, it is worth noting that according to KPMG, a tax on sugary drinks of 20% (which is what the Treasury proposal works out to in the case of Coca-Cola) could net the government as much as R2.17-billion in taxes.
Just like industry has a powerful financial motive to oppose taxes, the government has a powerful financial motive in enacting them. Note also that this revenue will go into the general tax pot, instead of being ring-fenced to combat the public health problems that the government claims to be concerned about. It might be spent on the health sector or on public education campaigns, but it is equally likely to end up in corrupt arms deals or multimillion rand mansions for retired politicians.
The Treasury paper claims that a tax on SSBs is the most cost-effective health intervention to combat obesity. Tracking down the academic source of this claim – via several previous government reports – leads to this study from 2010.
Surprisingly, perhaps, it does not mention sugar at all. It investigates reducing fat intake, increasing dietary fibre intake, and encouraging physical exercise to combat obesity. It does not consider fiscal interventions (such as taxes or subsidies) on individual foodstuffs, and finds that in general they make only 0.5% difference to fat intake as a percentage of total daily energy intake.
The only intervention that proved even less effective was mandatory food labelling. Worse, the study found that a tax on fatty foods makes no measurable impact on body mass index, at all.
The reason why fiscal measures are the most cost-effective dietary intervention is not because they are so effective – they clearly aren’t – but because they cost so little to implement. Sugary drinks are an easy and arbitrarily selected target for an empty gesture designed to make it seem like the government is “doing something” about obesity.
The government claims that its tax measure will reduce obesity in adult males by 3.8% and in adult females by 2.4%. It relies for this claim on a paper that purports to predict the impact of a 20% tax on SSBs, written by Mercy Manyema and Karin Hofmann at Wits University.
The Manyema paper constructs a “mathematical model” based on a chain of assumptions, namely that the tax will be passed on to consumers, that this will reduce SSB consumption, which will change the number of calories consumed, which will change the consumer’s dietary energy balance, which will change their body mass index, which ultimately will lead to lower obesity rates. However, these assumptions are, for the most part, unsupported by empirical evidence.
On the contrary. A review of 880 studies linking economic interventions to changes in diet and physical activity, conducted by scientists at the Behaviour and Health Research Unit at the University of Cambridge, has found little evidence that the Manyema paper’s postulated chain of causation actually holds up in the real world…..