01 Apr 2017 SA’s revised sugar tax: reactions from both sides
Government has so weakened its proposed tax on sugary drinks that it might not be enough to encourage consumers to switch to healthier drinks, say health activists.
Speaking ahead of Friday 31st March’s deadline for comment on the sugary drinks tax, Wits University’s economic think-tank Priceless, said: “The changes to the design of the tax have reduced it from an approximate 20 percent tax to now an approximate 10 percent tax. The much smaller increase in price is a less significant deterrent.”
The price increase on a 330ml can of Coca Cola will be about 42 cents instead of the R1 initially proposed.
“While the 10% taxation is certainly a step in the right direction, it may not be enough to have a positive impact on consumers’ health,” says Dr Craig Nossel, head of Discovery’s Vitality Wellness.
“Research published earlier this year looked at the impact of food pricing on dietary intake. It was found that each 10% increase in price decreased consumption of unhealthy food and beverages by 6%. When sugary beverages were evaluated separately, consumption decreased to nearly 7%.”
Revert to 20 percent
Nossel “strongly encourages” government to revert to the original 20 percent proposal as this “will indicate a commitment to address the high correlation between obesity, non-communicable diseases and intake of sugary drinks.”
Treasury’s new proposal involves a tax of 2.1cents per gram of sugar, but it has decided thar the first 4g of sugar per 100ml will be exempted from the tax.
Tracey Malawana of the Healthy Living Alliance (Heala) said that there was “no health justification for the exemption on the first 4g per 100ml, and no other country with a successful sugary drink tax has done this”.
Nossel also proposed that Parliament scrap the 4g tax exemption in order to “encourage manufacturers to reformulate products to have a lower sugar content and thereby benefit consumers”.
Treasury has also proposed that concentrates (squashes and syrups) will be taxed at 50 percent of the proposed rate because consumers add water to these products.
But Heala wants the tax on concentrates to be increased as “this is the fastest growing segment of the sugary drink market”, with consumption almost doubling in the past seven years.
“To achieve its objective of improving health, the tax must encourage South Africans to consume beverages that are lower in sugar, instead of switching to cheap sugary concentrates,” says Malawana.
Use tax for health promotion
She also said Treasury needs to clarify whether fruit and vegetable juices and dairy-based drinks with added sweeteners (whether using a fruit juice, concentrate-based sweetener, or any other caloric sweetener) are to be taxed.
Heala also wants the tax revenue to be used for health promotion measures, such as “increasing the number of community healthcare workers, funding nurses in schools, implementing health and nutrition education campaigns and improving water and sanitation infrastructure”, says Malawana.
Priceless, Heala and Vitality all propose taxing 100 percent fruit juice as well.
“The health benefits of fruit juice can be misleading, considering the low fibre and very high sugar and energy content,” says Nossel. “There is also growing body of evidence that supports the link between drinking a lot of fruit juice and overweigh, obesity and type 2 diabetes. Combine this with the fact that consumers may start drinking more fruit juice if it is not taxed, and it could have the exact opposite effect on people’s health than this tax intends.”
Source: Health E-News
Beverage industry responds to revised tax proposal on sugar sweetened beverages
The Beverage Association of South Africa (BevSA) welcomed changes to the proposed Sugar Sweetened Beverages (SSBs) tax outlined in the Budget speech, but maintains its concerns about the negative economic impact; limited health gains; as well as inadequate baseline studies in a submission to National Treasury on the matter.
The Draft Rates and Monetary Amounts and Amendment Bill tabled in Parliament by the former Minister of Finance Pravin Gordhan in February incorporates a tax on sugary beverages and represents the first indication of how National Treasury’s proposed Health Promotion Levy, may manifest in law.
While acknowledging and agreeing with WHO targets on sugar consumption, and supporting initiatives to reduce total sugar intake in a sustainable way, BevSA said it remained concerned that there had been disproportionate focus specifically on sugar in beverages as a source of calories.
The levy targets just 3% of the average South African’s daily caloric intake, and as proposed will have no discernible impact on obesity – reducing the average daily intake of South Africans by just 3 to 4 Calories/day.
BevSA executive director, Mapule Ncanywa said the NEDLAC and Parliamentary processes now in motion offered an opportunity for all interested parties to engage, and together develop an effective anti-obesity solution that will not lead to job losses while still meeting health objectives.
“Surely such a win-win as a South African solution should be given an opportunity. To do this full consultation across unions, civil society, Government and business is required and more information and research would assist such deliberation, we urge the Government to pause legislative action until such research is available and such engagement and consultation processes have run their course.
“We maintain that a total dietary study is absolutely necessary to clarify the key causes of obesity in South Africa and to establish a benchmark against which future improvements can be ascertained. To be clear, obesity is a problem and we can be part of the measures toward addressing this problem, but singling out one beverage category and taxing it punitively does not make sense, especially as we are offering up an alternative solution that unions and civil society are discussing with us.”
The industry had already committed to reducing calories consumed from SSBs by 15%, through reformulation; changes to pack sizes; and offering low and no-calorie options, and is forging ahead to reviewing its progress toward this target that has been accelerated in support of Government’s objectives. This partnership approach could generate calorie reductions three times the size of the levy proposal, with none of the economic impacts.
While BevSA members committed to reducing the sugar content of their products, they requested that they be given a reasonable amount of time to do so prior to introduction of the tax. The organisation said the timeframes for implementation were especially challenging for smaller, local brands, where reformulation was more difficult.
In its submission, the association also asked for clarity on the rationale for selecting 4g/100ml as the threshold for the tax as a starting point.
“While Treasury indicated that the 4g threshold was arrived as a result of stakeholder engagement, it presents an impossible target for many industry players to attain in a short space of time, and was certainly not consulted on with the industry most immediately impacted” added Ncanywa.
BevSA said it believed the current proposal to include the Health Promotion Levy within the Rates and Monetary Amounts and Amendment of Revenue Laws Bill was flawed, and instead proposed that the fiscal element of an obesity strategy be included in the Taxation Laws Amendment Bill. Owing to its technical complexity, the Taxation Laws Amendment Bill would be more appropriate for the introduction of new tax administrative procedures and other technical and procedural changes to tax laws.
Ncanywa added: “We look forward to working with government, unions and civil society to finding a solution to the serious and complex challenge of obesity that makes sense for all South Africans, while continuing to make an important economic contribution to the South African economy.
“We believe a comprehensive strategy developed by all role players, with a set of effective solutions to achieve meaningful reductions in the incidence of obesity in South Africa is necessary.”