Sugar tax to be expanded
Beverage industry to continue fight as drop in tariff, inclusion of fruit juices announced
CONFIRMATION that the controversial sugar tax will be implemented during the course of this year has been met with a bitter-sweet reaction from beverage industry stakeholders, labour and the health sector.
Making two references to the tax in his budget speech yesterday, Finance Minister Pravin Gordhan not only confirmed implementation of the sugar-sweetened beverages tax, but also announced that beverages such as 100% fruit juices – which contain “intrinsic” sugar – may also be subjected to the tax.
“Further consultations are currently taking place on the tax on sugary beverages. Arising from these discussions, and working closely with the Department of Health, the proposed design has been revised to include both intrinsic and added sugars,” he said.
Gordhan also revealed that the tax is to be calculated at a cost of 2.1 cents per gram of sugar content in excess of four grams per 100ml.
This tax is marginally lower than the 2.29c per gram that was originally proposed.
Reacting to Gordhan’s comments, Coca-Cola Beverages Africa chairman Phil Gutsche said that while it was too early to comment, any excise duty or any additional tax would result in more unemployment.
“We, as the beverages industry, are very concerned about this,” he said.
“The tax will have exceptionally negative affects and particularly on unemployment.”
Gutsche said that despite the advanced stages of the tax proposal, the industry had not given up opposing the tax.
He described as “startling” the proposal to consider taxing the intrinsic sugar contained in beverages such as 100% fruit juices.
Cosatu said the tax threatened jobs in rural sugar-producing areas.
The SA Sugar Association said it was pleased the tax would not be implemented in April as previously expected, and that it was likely to undergo further public comment.
“The sugar industry is under siege due to a devastating drought, inadequate import tariff protection and other external factors,” it said.
“The proposed tax will compound matters and threaten the survival and sustainability of the industry.
“In addition, one of the ramifications ... would be job losses.
“It is inevitable that the imposition of the tax will negatively impact both the sugar milling and sugar cane agricultural sectors,” the association said.
The Healthy Living Alliance (Heala) welcomed the announcement that part of the tax proceeds would be used to fund health promotion interventions.
It was, however, disappointed that the proposed tax rate had been reduced, saying that the tax may not be sufficiently high to deter consumption of sugary drinks.
“Tackling obesity should be a national health priority,” Heala coordinator Tracey Malawana said.
“While there is no silver bullet that will slim down the nation, cutting sugar consumption is a nonnegotiable public health measure.”