Deterrent likely to be met by bitter opposition

The Treasury has made good on Health Minister Aaron Motsoaledi's threats to introduce a tax on sugar-sweetened beverages, saying yesterday that it planned to impose the levy next April.

Business Day, 25 February 2016

The move is intended to reduce consumption of these drinks, which raise the risk of obesity and non-communicable diseases. Obesity rates have soared around the world in the past 30 years and SA is no exception. In tandem with soaring obesity, there has been a worldwide surge in consumption of sweet soft-drinks.

The Treasury's deputy director-general for tax and financial sector policy, Ismail Momoniat, said it is not about raising revenue, but about making them more expensive and reducing consumption. He said the tax would not be an isolated intervention but would need to be accompanied by "a package of measures", including education and regulation, as with tobacco control.

Momoniat said details would be provided shortly, as the aim was to include the measures in the draft Taxation Laws Amendment Bill. The tax is likely to run into stiff opposition from beverage companies, which have a strong presence in SA.

The Beverage Association of SA, which was not available yesterday, has previously said a "discriminatory" tax is not an "effective measure because evidence shows consumers switch to different alternatives of the same or similar foods instead". The Treasury's chief director for health and social development, Mark Blecher, said there was growing evidence "environmental taxes" such as a sugar taxes could play an important role in promoting health, citing Mexico's introduction of a 10 percent sugar tax.

Researchers found the average person purchased 4.2 litres less of sugar-sweetened drinks in 12 months since the tax was introduced in January 2014. The greatest reduction was among poor households, where consumption fell 17 percent. A local study published in 2014 found a 20 percent tax on sugar-sweetened drinks could cut the number of obese South Africans by almost 250 000, saving lives and money.

It said South Africans consume 12-24 teaspoons of sugar a day, about a third of which comes from sugar-sweetened beverages. One such drink typically contains eight teaspoons of sugar. The study assumed a 20 percent tax on sugar-sweetened drinks would be passed on to consumers and reduce demand. The average daily energy intake per person would fall by 36kj, which would translate into 222 669 fewer obese adults. Study co-author Karen Hofman said at the time that the cost of obesity and the complications caused by obesity-related diseases have a very serious financial impact on the family, caregivers and breadwinners.