24 Feb 2017 SA beverage industry relieved about sugar tax revisions

The Beverage Association of SA (BevSA) has welcomed the Treasury’s revised plans for a tax on sugary drinks. The plans are open for comment until March 31.

In his 2017 Budget, Finance Minister Pravin Gordhan said the proposed sugar tax now gives drinks manufacturers and importers some respite, as it has been slightly reduced and will only kick in above the 4g per 100ml threshold.

The tax has been trimmed from 2.4c per 100ml to 2.1c per 100ml.

The tax is intended to decrease consumption of sugary drinks by raising its price. Sugary drinks are associated with obesity, which raises the risks of noncommunicable diseases.

“Over the past few months we have continued to engage with the government and other stakeholders actively to find a workable solution to the complex challenge of obesity in SA,” said BevSA executive director Mapule Ncanywa.

“We believe that through collaboration with all the relevant role players, we can find ways to create a win-win [situation] for all South Africans, contribute positively to health outcomes and avoid any job losses.”

While 100%-fruit juices and milk remain exempt, the new proposal will subject products containing intrinsic sugars to the tax, said the Treasury’s director for VAT, excise duties and sub-national taxes, Mpho Legote.

Intrinsic sugars are natural sugars found in fruit and vegetables, such as fructose. The new design means all the sugars contained in a non-natural product such as sweetened fruit juice or drinking yoghurt will be subject to the tax, said Legote.

Concentrated products such as fruit syrups will be taxed at 1.05c per 100ml.

BevSA said it had repeatedly called for a local dietary study to be conducted to determine the drivers of obesity as well as a wider socio-economic impact study to assess the cost-effectiveness of the tax.

Karen Hofman, director of the University of the Witwatersrand’s Public Health think-tank Priceless SA, expressed disappointment, saying the change to the structure of the tax would dilute its effect.

“The effects of these sugary drinks are often only seen many years later…. We allow our children to drink these [products] as if they were water, yet one can of [soda] a day increases the risk of diabetes by 27%,” she said.

Source: BusinessLive.co.za