South Africa sugar tax will affect jobs and economic growth, says beverage industry

The proposal for a 20% tax on sugar-sweetened beverages​​ was announced in the February 2016 Budget by the Minister of Finance, driven by ambitions to reduce obesity in the country (South Africa is ranked the country with most obesity in sub-Saharan Africa). The tax is due to come into effect in April 2017.

Coca-Cola Beverages Africa chairperson, Phil Gutsche, called on the Eastern Cape provincial government and Nelson Mandela Bay Municipality to oppose the tax at a press conference this week, because of the threat to jobs and the local economy. 

He was supported by the Beverages Association of South Africa (BevSA), Eastern Cape businessman and Coca-Cola Beverages South Africa shareholder Steven Dondolo, Little Green Beverages of Buffalo City, and Twizza soft drinks of Queenstown.

Gutsche said, “​Nationally, we [the beverage industry] support more than 200,000 jobs. If this tax proceeds, we stand to lose 60,000 jobs in our industry. More than 5,000 livelihoods will be affected in Nelson Mandela Bay alone.”​

Gutsche added that the beverage industry’s contribution to the economy has increased much faster in real terms since 2008 (258% increase) than overall GDP (which grew by 43%). 

He added that the poor will carry a disproportionate burden from the sugar tax, but benefit from only a small reduction in calories.

“The poor will therefore literally become poorer and not thinner as a result of this proposed tax,”​ he said.

BevSA says that sugar-sweetened beverages only account for 3% of daily kilojoule intake.  

It adds that the beverage industry is committed to South Africa’s economy, with plans to invest in opening 30,000 new outlets (creating 60,000 new jobs) over the next five years.

“Voluntary reformulation, packaging, labeling and other targeted commitments, already adopted in South Africa, will result in greater impact on tackling obesity than the anticipated reduction of only 37 kilojoules a day because of a tax,” ​it says.

Randall Dayce, plant manager at Coca-Cola Beverages South Africa in Nelson Mandela Bay, said the tax would have ‘significant implications for employment and growth prospects.’