DON’T SUGAR-COAT THE TRUTH, THIS TAX IS BAD NEWS
THE imposition of a tax on sugarsweetened beverages was debated at a joint meeting of parliament’s health and finance committees a week ago.
Meanwhile, the executive board of the World Health Organisation (WHO) decided not to endorse recommendations to impose a soft drinks tax on member states until a technical review of the available studies and documentation has been conducted.
Perhaps the South African proponents of a sugar tax should follow suit and use their time to learn more from real world examples. The Danish government eliminated a tax on soft drinks on January 1 2014, one year after scrapping a tax on saturated fat and a proposed tax on sugary products.
It was estimated that more than half of the revenue raised by the tax was lost to illegal and crossborder sales. In 2012, the Danish tax ministry stated, “the suggestions to tax foods for public health reasons are misguided at best and may be counter-productive at worst,” and that the taxes “can become expensive liabilities for the businesses forced to become tax collectors on the government’s behalf”.
The Danish government is opposed to these taxes because of the high administrative costs, job losses and the greater impact increased consumer prices have on low-income households.
Iceland also discontinued a tax on goods with sugar and other sweeteners. The tax, imposed per litre for beverages and per kilogram for foods, was abolished in 2015 by the Icelandic treasury to benefit households and simplify the tax system.
In several countries, taxing sugar-sweetened beverages (SSB) or food considered unhealthy has been considered, only to be rejected after public debate. For example, Romania considered fast food and SSB taxes in 2010 and 2011, but abandoned these initiatives after concerns were voiced about the difficulty of implementing these taxes and industry warnings about potential job losses. New Zealand is the latest to announce that a sugar tax does not work.
A sugar tax will not result in any perceptible difference to obesity rates. Consumers in South Africa, like elsewhere, will simply switch to alternative products such as fruit juice, sweets, cakes, and biscuits. And producers will switch to sweeter alternatives such as nonnutritive artificial sweeteners.
No doubt, in time, our selfappointed health overlords will just start taxing these other foods in an ever-widening tax net and an everincreasing cost of living.
This kind of tax is regressive as it will force the poor to pay a larger proportion of their income than the wealthy towards raising new government revenues. The tax will also punish those who are not obese. To the extent that such a “sin tax” will raise revenue for the state, it will be at the consumer’s expense of doing without whatever else they might have spent their money on, whether essential or just a luxury.
There is no way at all of knowing what that might have been. The appetite of officials for more tax and control is arguably unhealthier, ethically and physiologically, than the conduct of consumers of these beverages and other products that may be deemed sinful.
Policy-makers should generate sufficient, high-quality evidence before implementing a policy and have plans in place to measure the effectiveness of a policy once instituted.
“Sin taxes” to control private health problems can lead government down a slippery slope. Where will the line be drawn? What next, will sedentary people be taxed for not exercising?
The government cannot control all behaviour deemed to be a health risk for individuals. Attempting to do so will have unintended consequences and create high regulatory costs. Society will be worse off with less consumer freedom, a heavier tax and regulatory burden, and wider income inequality.
Better health outcomes can only be achieved by making reliable information widely and easily available and allowing people to take charge of their own lives.