Sugar tax a bitter pill for many

National Treasury has signalled a clear warning to the beverage industry: innovate or the proposed tax on sugary beverages will increase. The proposed tax rate (2.1c per gram of sugar content in excess of 4g per 100ml) might be relatively low, but it is also intended as notice to the industry of the seriousness of government’s health agenda, Ismail Momoniat, deputy director-general for tax and financial sector policy, said at the Gordon Institute of Business Science.

Broader drive

Treasury insists the planned introduction is part of a broader effort to reduce excessive sugar intake and tackle non-communicable diseases.

But the beverage industry, spaza and tuck shop owners and some unions fear it will lead to thousands of job losses.

In its current form, the tax on a 330ml can of Coca-Cola is 45.7c.

Treasury’s economic modelling suggests up to 5 000 jobs could be lost if the industry doesn’t innovate and reformulate.

Momoniat took issue with studies suggesting 60 000 jobs in jeopardy, saying they were “ridiculous figures”.

Tshepo Marumule, general manager for corporate services at the Beverage Association of South Africa, said a fixation on job effects clouded wider impacts.

Emerging black industrialists would not be able to take the same mitigatory action affordable to entrenched players and the tax would hit black businesspeople disproportionately, he said.

The absence of a total dietary study into sources of sugar consumption and alternatives obstructed finding a comprehensive solution, he said.

Sibusiso Sepeng, CEO of the South African Spaza and Tuck Shop Association, argued the introduction of the sugar tax would not reduce the consumption of sugary beverages. The consumption of alcohol has risen, despite the introduction of sin taxes on alcohol, he said.

Lifestyle factors

Craig Nossel, head of vitality wellness at Discovery, said 55% of deaths were related to lifestyle factors in South Africa.

This issue had to be addressed, not merely by introducing a tax, but also through other initiatives, like understanding how people purchased products, how products were positioned and marketed, and the impact of sponsorships.