The proposal for a tax on sugar-sweetened beverages was announced in the February 2016 Budget. It was due to come into effect on April 1, 2017, but it has been put back to allow further consultation to take place.
BevSA says that ‘singling out the beverage category and taxing it punitively does not make sense’, instead saying that government, unions and civil society should work together to tackle obesity.
‘A total dietary study is absolutely necessary’
The South African beverage industry says the proposed tax on sugar-sweetened beverages would threaten thousands of livelihoods and economic growth.
Meanwhile, the levy would address only 3% of the average South African’s daily caloric intake, and reduce the average daily intake by just 3-4 calories a day, thus ‘having no discernible impact on obesity’, says BevSA.
Published in February, the Draft Rates and Monetary Amounts and Amendment Bill tabled in Parliament included revised plans for the tax on sugary beverages, setting a threshold of 4g sugar per 100ml.
The tax has been reduced from 2.29c per gram of sugar to 2.1c, and the tax will come in at around 11%, as opposed to the 20% initially proposed, according to Business Day. 'Sugar' refers to both the intrinsic and added sugar contained in any sugary beverage, and fruit juice and milk will be exempt.
BevSA has just submitted its response to the draft bill. While it welcomes the changes, it maintains its concerns about the 'negative economic impact, limited health gains and inadequate baseline studies'.
It says the processes now in motion offers an opportunity for all parties to engage in creating an effective anti-obesity solution that will not lead to job losses while still meeting health objectives.
Mapule Ncanywa, executive director, BevSA, said: “To do this, full consultation across unions, civil society, government and business is required.
“More information and research would assist such deliberation, and we urge the Government to pause legislative action until such research is available and such engagement and consultation processes have run their course.
“We maintain that a total dietary study is absolutely necessary to clarify the key causes of obesity in South Africa and to establish a benchmark against which future improvements can be ascertained.”
BevSA says it supports WHO targets on sugar consumption and acknowledges that obesity is a problem, however, it says that “singling out one beverage category and taxing it punitively does not make sense, especially as we are offering up an alternative solution that unions and civil society are discussing with us.”
Draft legislation
The Draft Rates and Monetary Amounts and Amendment Bill gives an indication of how the ‘Health Promotion Levy’ may manifest in law.
In its response, BevSA has asked for clarity on the rationale for selecting 4g sugar per 100ml as the threshold for the tax.
“While Treasury indicated that the 4g threshold was arrived at as a result of stakeholder engagement, it presents an impossible target for many industry players to attain in a short space of time, and was certainly not consulted on with the industry most immediately impacted,” said Ncanywa.
BevSA members are already committed to reducing calories consumed from sugar sweetened beverages by 15% through reformulation, different pack sizes and no/low calorie options. It believes its partnership approach could generate calorie reductions three times the size of the levy, with none of the economic impacts.
It is also calling for a reasonable amount of time before the implementation of a sugar tax, saying that current timeframes for implementation are especially challenging for smaller, local brands.
BevSA would also like to see the Health Promotion Levy included in the Taxation Laws Amendment Bill, rather than the Rates and Monetary Amounts and Amendment of Revenue Laws Bill, due to the technical complexity of such legislation.