Will industry blame sugar tax for the global job cuts?

PARLIAMENTARY public hearings on the Rates and Monetary Bill which includes the proposed sugary drinks tax resume today with the government and union leaders continuing to raise concerns that industry might blame planned job cuts on the tax.

“The entire sugar industry is in decline and we’ve lost 15 000 jobs in the last few years,” said Cosatu’s Matthew Parks.

While the trade federation was worried about job losses, it felt there was also a danger that industry could use the tax to its advantage.

“It’s a global crisis and a real minefield. We want the government and business to work together with us to find creative solutions to the job crisis,” said Parks.

Coca-Cola International chief executive James Quincey announced earlier this month that the company was planning to cut about 10 000 jobs globally due to outsourcing and technological advancements.

Treasury deputy director-general Ismail Momoniat said yesterday that the government didn’t want industry to use the tax as a rationale to fire staff.

The Beverage Association of South Africa (BevSA) said up to 70 000 jobs were in danger, but Momoniat said the claims amounted to scare tactics.

Treasury had estimated that about 5 000 jobs would be at risk – but that was before the tax was reduced from 20% to 11% on a can of Coke earlier this year.

BevSA’s estimates were also published before the tax was revised. It predicted that 4 000 to 6 000 informal outlets would close.

BevSA general manager Tshepo Marumule said the outlets made 17% of their revenue from the sale of sugary drinks. “The total job losses across the industry and value chain will number around 24 000 jobs,” he said.

But Momoniat said the “impact will not be very large”.

His department conducted a socio-economic modelling study on the impact of the tax.

“But there is a lot of misunderstanding around these modelling studies. They present scenarios based on assumptions and shouldn’t be taken as fact,” he said.

Derek Hanekom, a member of the parliamentary standing committee on finance, said a solution could be to increase the amount of sugar the country exported.

He said the job loss claims were exaggerated and there were ways to reduce the impact.

Parks agreed that higher exports should be encouraged and urged the government to ensure farmers be given access to international markets. “We also need the government’s assistance to reduce sugar imports so that local demand will be higher.”

‘THEY ARE MAKING EXAGGERATED CLAIMS. IT’S A BUSINESS DECISION BASED ON PROFITS’

Last month, it was reported that job cuts were made as a result of a sugar tax in Philadelphia, US.

Professor Karen Hofman, from the Wits School of Public Health, said the industry’s claims amounted to “fake news”.

“Worldwide, the beverage industry’s plan is to cut jobs for all sorts of reasons, including streamlining their processes. That is why they are making these exaggerated claims, ahead of time. In reality, it is a business decision based on profits that has already been made.” – ANA/ Health-e News