Experts foresee an increase in taxes

ASANDA SOKANYILE asanda.sokanyile@inl.co.za

AS THE country waits with bated breath to hear what the minister of finance has in store in next week’s Budget speech, finance experts expect taxes to be increased – from VAT to fuel levies, and if the NGO Healthy Living Alliance (Heala) has its way, sugar tax.

While sugar tax is raking in billions, the lobbyists for the tax want it to go even higher to be more effective.

The tax was part of the Department of Health’s strategy to reduce obesity by 10% by 2020, which further formed part of a broader public health strategy to reduce non-communicable diseases (NCD) such as diabetes, hypertension, heart disease and some cancers.

Since it was introduced in 2018, sugar tax has collected

R3.29 billion. However, with only fizzy drinks on the list, if (Heala) gets its way, fruit juices will also be added to the high sugar content beverages and sugar tax may increase from 11% to 20%.

Two weeks ago, Heala presented a petition to Treasury with testimonies from people affected by NCDS.

A tweet posted by the organisation showing the petition being handed over, said more than 17000 people signed.

They originally wanted the tax introduced at 20% before it was passed at 11% two years ago.

The organisation believes not only will the increase in sugar tax be a health benefit to South Africans, it could be the answer to much-needed funds to bridge the R350 million gap needed by the Health Department.

“A major contributor to NCDS is the consumption of unhealthy foods that contain excess sugar, salt and fats which affect obesity rates,” said Heala’s programmes manager, Lawrence Mbalati.

“Government needs to hold the unhealthy food and beverage industry accountable for their contribution to the burden of diseases that are crippling the health-care system.

“The sugar tax has been implemented in many other countries. We have data, for example, in the UK that demonstrates that a stronger tax will always result in curbing consumption of sugary drinks.”

However, according to a letter by Rex Talmage, of the SA Cane Growers’ Association, millions of people who rely on the sugar industry for jobs and their livelihoods will be greatly affected.

“Two years after the tax’s introduction, the public has still not seen any solid evidence that it has had a tangible impact on curbing obesity in the country.

“Yet there is considerable evidence that this rash tax has had a devastating impact on

South Africa’s economy and jobs.

“The tax has cost the sugar industry about R1.5bn, and the cane growing sector alone lost about 9000 jobs in the first year.

“Most job losses are in poor, rural areas, where job creation and economic growth are desperately needed,” said Talmage.

South Africa exported 40% of its processed sugar in the 2017/18 season, but the industry will likely increase that to 47% of the total this year, selling nearly half of it at a lower price on the global market that translates to a loss of R1.3bn for the 2018/19 season.

According to Graeme Stainbank, chairperson of the SA Canegrowers Association, at the time, the loss in revenue was expected to lead to a loss of 1 000 jobs.

It is yet to be determined how many jobs may be affected should the levy increase.