Sugar tax will do far more harm than good

The Star Early Edition - - INSIDE -

THE LAT­EST pub­lic hear­ings on the health pro­mo­tion levy, oth­er­wise known as “sugar tax” has again high­lighted our health chal­lenges, par­tic­u­larly as they re­late to obe­sity and non-com­mu­ni­ca­ble dis­eases (NCD).

There is no doubt that an ex­ces­sive sugar in­take can harm hu­man health. Equally so any­thing that is not con­sumed in mod­er­a­tion. How­ever, the de­bates fo­cused on the tax rather than how we, as a na­tion, can re­duce obe­sity and NCD.

The gov­ern­ment, to its credit, plans to in­tro­duce the tax as an in­stru­ment to re­duce the un­ac­cept­ably high lev­els of obe­sity and non-com­mu­ni­ca­ble dis­eases.

The Bev­er­age As­so­ci­a­tion of South Africa (BevSA) agrees that the rate of obe­sity and NCD is too high and needs at­ten­tion.

It is in re­sponse to this prob­lem that in 2014, the in­dus­try made com­mit­ments which in­cluded the re­duc­tion of sugar con­tent in our bev­er­ages by 15%.

The as­so­ci­a­tion ac­knowl­edges the con­tri­bu­tion of sugar and its ef­fect on the health of the na­tion. How­ever, sugar-sweet­ened bev­er­ages ac­count for only 3% of total daily calo­rie in­take com­pared to other food­stuffs.

While the in­tro­duc­tion of a sugar tax might de­crease con­sump­tion, there is no ev­i­dence that it will yield the de­sired ef­fect on the re­duc­tion of obe­sity and NCD lev­els.

BevSA be­lieves that one of the gen­eral driv­ers in obe­sity rates is over­all daily calo­rie con­sump­tion, which in­creased from 2 816 in 1991 to 3 022 in 2013, and con­tin­ues to grow due the con­sump­tion of such things as ce­re­als, veg­etable oil and poul­try, in­di­cat­ing a di­etary shift to­wards meat and pro­cessed foods, and de­clin­ing lev­els of phys­i­cal ac­tiv­ity.

In­dus­try also be­lieves that there are many other op­tions that can be more ef­fec­tive in re­duc­ing sugar in­take.

Work­ing with gov­ern­ments, the McKin­sey Global In­sti­tute has iden­ti­fied in­ter­ven­tions to re­duce obe­sity with vary­ing lev­els of ef­fec­tive­ness.

The in­dus­try pro­pos­als in­clude com­mit­ments that cover por­tion con­trol, re­for­mu­la­tion of con­tents, mak­ing avail­able low-calo­rie al­ter­na­tives, la­belling, and price pro­mo­tion as these have the most im­me­di­ate im­pact on calo­rie in­take.

The in­dus­try has im­ple­mented some of these, which ad­mit­tedly have not been tested or im­ple­mented fully in South Africa, and should be con­sid­ered with other mea­sures.

For ex­am­ple, South Africans en­joy lower calo­ries to ze­road­ded sugar op­tion prod­ucts, and some prod­ucts are avail­able in smaller pack­ag­ing. In­ter­ven­tions are geared to­wards en­cour­ag­ing mod­er­ate con­sump­tion.

The bev­er­age in­dus­try con­trib­utes sig­nif­i­cantly to the gross do­mes­tic prod­uct and job cre­ation with R62.1 bil­lion gross value and be­tween 260 000 and 300 000 jobs. This amounts to R17.5bn in tax rev­enue to the fis­cus. While it can­not be in­ferred that the econ­omy takes pref­er­ence over health, the so­cial ills that might be in­tro­duced as a re­sult of the tax can­not be ig­nored.

Fur­ther­more, the tax does not take into con­sid­er­a­tion the so­cio-eco­nomic im­pact it will have across the value chain. These in­clude emerg­ing farm­ers, dis­trib­u­tors, in­for­mal traders and smaller pro­duc­ers. It is es­ti­mated that the pro­posed tax will re­duce the GDP by R1.85bn and lead to un­avoid­able job losses.

We an­tic­i­pate that the largest loss will be in the in­for­mal sec­tor where an an­tic­i­pated 4 000 to 6 000 clo­sures of in­for­mal out­lets like spaza shops for which sugar-sweet­ened bev­er­ages are es­ti­mated to con­trib­ute 17% of rev­enue and 30% of mar­gin.

We also an­tic­i­pate job losses across the in­dus­try and value chain will be about 24 000, which will be detri­men­tal to our econ­omy in this eco­nomic cli­mate where un­em­ploy­ment is in­creas­ing.

BevSA pro­poses cost-ef­fi­cient in­ter­ven­tions, which are more ef­fec­tive than a sugar tax in com­bat­ing obe­sity with­out ad­verse eco­nomic im­pact, be in­ves­ti­gated. Added to this, the sugar tax will un­der­mine the gov­ern­ment’s in­ten­tion to re­duce obe­sity and NCD as it in­tends to drive a 0.24% to 0.32% calo­rie re­duc­tion.

How­ever the in­dus­try has com­mit­ted to pro­grammes, as out­lined, be­liev­ing they will drive a 15% calo­rie re­duc­tion by next year, which is four times that of the en­vi­sioned pro­posed levy, through meth­ods like re­for­mu­la­tion and in­tro­duc­tion of ex­tended-lower or sugar-free prod­ucts.

BevSA be­lieves the health pro­mo­tion levy should not be im­ple­mented in its cur­rent form and fur­ther in­ves­ti­ga­tion needs to be done to al­low for proper en­gage­ment and con­sul­ta­tion among par­ties across the value chain to find other ways to build a health­ier na­tion.

We be­lieve the gen­eral dis­course on the tax has cre­ated a false di­chotomy, that to im­prove health you have to neg­a­tively af­fect the econ­omy, or to pre­serve the econ­omy you have to do it at the ex­pense of health.

As BevSA, we aren’t call­ing for a pri­ori­ti­sa­tion of econ­omy over health, nor do we sup­port the call to pri­ori­tise health over econ­omy. Both are im­por­tant and our so­lu­tion en­sures we pur­sue and achieve both out­comes.

Par­ties at Ned­lac have also made the call for fur­ther con­sul­ta­tion, and there is a gen­eral con­sen­sus that fur­ther con­sul­ta­tion is re­quired to min­imise the im­pact on the econ­omy and job cre­ation.

We hope the sec­ond round of hear­ings will holis­ti­cally con­sider the in­put of all of in­dus­tries and give more time for fur­ther en­gage­ment.

BevSA is ready to work with the gov­ern­ment and all stake­hold­ers to find long-last­ing so­lu­tions that lead to a long and healthy life for all, while sav­ing the econ­omy and much-needed jobs.

It has also been an­tic­i­pated job losses will be about 24 000

Ma­pule Ncanywa is the ex­ec­u­tive direc­tor of the Bev­er­age As­so­ci­a­tion of South Africa

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