Sugar tax will do far more harm than good

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