Bitter fruits of sugar tax
SUGAR lovers will be left with a bitter taste in April, when the price of sugarsweetened beverages goes up.
The government-proposed sugar-sweetened beverage tax is expected to kick in on April 1 2017, pushing the price of such drinks up by a whopping R2.29 per gram of sugar.
The tax will affect any beverage containing sugar, from soft drinks, energy drinks and iced tea to sugar-sweetened fruit drinks.
Not affected are 100% pure fruit juices and milk products.
In the policy document containing the taxation proposal, National Treasury reiterates that the proposal comes against a backdrop of growing global concern over obesity stemming from overconsumption of sugar.
“Obesity is a global epidemic and a major risk factor linked to the growing burden of noncommunicable diseases including heart diseases, type 2 diabetes and some forms of cancers,” the proposal reads.
But Chris Hattingh from the Free Market Foundation – an independent public-benefit organisation – said despite its noble intentions, the tax would have devastating consequences on society.
This was echoed by Nigel Connellan, managing director of Western Gruppe Trading, which runs 13 Spar outlets around East London.
He said the sugar tax had been implemented in a few countries but had not had the desired effect. “In fact, some countries are now doing away with the sugar tax as it has been ineffective,” Connellan said, adding that consumers should expect an increase of about R3 for carbonated soft drinks and R5 for 2 litres of the product. “Cordials like Oros will also be hugely affected and sadly we can be sure of retrenchments nationwide.”
Hattingh said an estimated 42 000 jobs could be lost, with the retail sector to be hit hardest. “It [the retail sector] could well lose a further 15 000 jobs. Anticipated job creation would become almost impossible to generate.
“The more taxes there are, the less willing people are to start and maintain a business. The government says its plans are intended to help the poor. The people this tax would affect the most, however, are the [owners of] informal and often homebased spaza shops, which rely on soft drink sales for some 15% to 20% of their revenue.
“This tax would significantly reduce the sales and profit margins of these small enterprises, and could lead to the closure of between 6 500 and 11 500 of [them].”
Consumer Nonkululeko Ngxata said the sugar tax should be seen in a positive light as it could help people cut down on their sugar consumption. “Sugar is a killer and we all need to cut down. I think people will still buy these cooldrinks despite the price increases, but I think the tax will help us cut down on the quantities,” she said.
Connellan, however, said he did not believe this would stop South Africans from drinking carbonated soft drinks.
“The tobacco tax did little to reduce smoking; it only helped fuel the black market and the illicit cigarette trade, costing the government billions in lost tax revenue. My personal opinion is they should not look at taxing a certain industry like carbonated soft drinks, but if they wish to earn extra tax on sugar, then they should do the tax at source. Then all manufacturers will be held liable. Why punish Coke when cereal manufacturers also have excess sugar in their products?” — zisandan@