Bitter ‘truth’ of sugar tax
COULD TRIGGER MASSIVE JOB LOSSES Sweetened beverages account for ‘just 3% of daily calories in SA’.
The Beverages Association of South Africa (BevSA) warned yesterday that the proposed discriminatory tax on sugar-sweetened beverages (SSBs) has the potential to reduce the industry’s contribution to South Africa’s gross domestic product (GDP) by R14 billion.
This is the equivalent of 0.4 percentage points of gross domestic product growth this year, the association said during the release of its formal response to National Treasury’s policy paper on this topic.
“The proposed SSB tax could trigger between 62 000 and 72 000 job losses, hurt the South African economy, exacerbate the broader fiscal and societal costs associated with unemployment, increase the burden on consumers with 25% price increases and damage the competitiveness of the nonalcoholic beverage industry,” BevSA said in a statement yesterday.
“The proposed tax will also undermine the National Development Plan (NDP) commitment to encouraging economic growth, eliminating poverty, and increasing employment.”
It further argued that it was unlikely that the tax would raise the revenues expected by the National Treasury.
“Government revenues from its existing taxes could fall by at least R3.1 billion a year, representing more than 40% of the revenue the government hopes to raise through the SSB tax.
“The tax would, through its impact on unemployment, result in increased UIF payments of approximately R0.7 billion,” the organisation claimed.
BevSA further noted that the tax would force many smaller producers to exit the market, thereby reducing industry competition.
According to the organisation, the tax would also have little impact on the country’s overall calorie intake.
“SSBs account for just 3% of daily calories in South Africa. A tax has been shown not to be the most effective mechanism to reduce obesity.”
In addition, BevSA said there was no conclusive evidence from other markets that imposing a tax on soft drinks helped people to lose weight.
It noted, however, that it remained committed to working with the government to tackle the obesity problem in South Africa, adding it had specific plans underway to reformulate beverages, offer smaller pack sizes, expand consumer access to low- and no-calorie beverages and invest in health education and awareness programmes. –