Concerns over new sugar tax

24.11.2017

Approval of bill dismays cooldrinks industry, sparking widespread fears of job losses

Manufacturers of sugar-sweetened beverages are dismayed by the approval of a tax bill for the industry, fearing it will lead to widespread job losses.

The health promotion levy, which is set to impose sugar taxes on these beverages from April, was passed in parliament on Tuesday.

The adoption of the bill followed extensive public hearings and negotiations, culminating in a tax that will be imposed at a rate of 2.1 cents per gram of sugar beyond a threshold of four grams of sugar per 100ml.

Though a parliamentary task team has been appointed to monitor the levy’s effect on job losses, Beverage Association of South Africa (BevSA) executive director Mapule Ncanywa said it would have an irretrievable and negative impact on the industry at large.

“It is disappointing that the bill has been adopted without due consideration of the concerns raised by industry and leaned only on government’s viewpoint,” Ncanywa said.

“The impact of food taxes has been proven in other markets not to work, and instead will have an impact on the economic growth prospects of the country’s GDP and lead us to a wave of job losses across the industry’s value chain.”

Ncanywa said the bill, which is built on promoting healthier living, would not be the most effective way to achieve the goal.

“There are other effective ways of achieving the intended health outcomes than the implementation of the levy and these have been outlined to parliament in our submissions.

“South Africans are still faced by the triple burden of poverty, unemployment and inequality, and to now impose a health promotion levy, at a time when we are trying to sort out the poverty gap, is counterproductive.”

Ncanywa called on the government to conduct an impact assessment study before the National Council of Provinces adopts the bill.

“Such a study will help all affected parties to mitigate the unintended consequences that the proposed levy may have on the economy and the industry.”

Coca-Cola Beverages South Africa (CCBSA) spokeswoman Wendy Thole-Muir said the company supported BevSA’s stance.

“CCBSA will definitely be adversely affected by the introduction of this levy, and certainly the Eastern Cape will not be an exception to this,” Thole-Muir said.

The Nelson Mandela Bay Business Chamber also expressed concern over the bill, which stands to affect several manufacturers in the region, including Coca-Cola, as well as Twizza in Komani and Little Green Beverages in East London.

Chamber spokeswoman Cindy Preller said: “We are concerned over the effect the implementation of the sugar tax bill will have on the local economy, considering that several big beverage producers are based in the region and province.

“With the high unemployment rate in the Eastern Cape and Nelson Mandela Bay, it is our sincere hope that the bill will not affect any jobs.”

In contrast, the Healthy Living Alliance (Heala) has welcomed the new bill for furthering the fight against obesity and noncommunicable diseases.

Heala coordinator Tracey Malawana said it was encouraging that parliament from across the political spectrum appreciated the seriousness of the non-communicable disease epidemic facing the country.

“Obesity is only one of the risk factors for communicable diseases and a sugary drinks tax is one of several strategies that are required to combat obesity.”

Malawana said Heala would be pushing for stronger tax measures in future.

“We will also be monitoring government expenditure to ensure that the proceeds from the tax will be spent on health promotion.”


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