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30 March 2017

Sugar tax too low to work

A 10% tax on sugary drinks is certainly a step in the right direction, but experts say it may not be enough to have a positive impact on South Africans' health.

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Government has watered down its proposed tax on sugary drinks so much that it might not be enough to encourage consumers to switch to healthier drinks.

This is according to a range of organisations speaking ahead of tomorrow’s (31 March 2017) deadline for comment on the sugary drinks tax.

“The changes to the design of the tax have reduced it from an approximate 20% tax to an approximate 10% tax,” says Wits University’s economic think-tank Priceless. “The much smaller increase in price is a less significant deterrent.”

A step in the right direction

The price increase on a 330ml can of Coca Cola will be about 42c instead of the R1 initially proposed, says Priceless.

“While the 10% taxation is certainly a step in the right direction, it may not be enough to have a positive impact on consumers’ health,” says Dr Craig Nossel, Head of Discovery’s Vitality Wellness. “Research published earlier this year looked at the impact of food pricing on dietary intake. It was found that each 10% increase in price decreased consumption of unhealthy food and beverages by 6%. When sugary beverages were evaluated separately, consumption decreased by nearly 7%.”

Nossel “strongly encourages” government to revert to the original 20% proposal as this “will indicate a commitment to address the high correlation between obesity, non-communicable diseases and intake of sugary drinks.” 

Treasury’s new proposal involves a tax of 2.1c per gram of sugar, but it has decided that the first 4g of sugar per 100ml will be exempted from the tax.

Tracey Malawana of the Healthy Living Alliance (Heala) said that there was “no health justification for the exemption on the first 4g per 100ml, and no other country with a successful sugary drink tax has done this”.

Nossel also proposed that Parliament scrap the 4g tax exemption  in order to “encourage manufacturers to reformulate products to have a lower sugar content and thereby benefit consumers”.

Treasury has also proposed that concentrates (squashes and syrups) will be taxed at 50% of the proposed rate because consumers add water to these products.

But Heala wants the tax on concentrates to be increased as “this is the fastest growing segment of the sugary drink market”, with consumption almost doubling in the past seven years.

Choosing healthy substitutes 

“To achieve its objective of improving health, the tax must encourage South Africans to consume beverages that are lower in sugar, instead of switching to cheap sugary concentrates,” says Malawana.

She also said Treasury needs to clarify whether fruit and vegetable juices and dairy-based drinks with added sweeteners (whether using a fruit juice, concentrate-based sweetener, or any other caloric sweetener) are to be taxed.

Heala also wants the tax revenue to be used for health promotion measures, such as “increasing the number of community healthcare workers, funding nurses in schools, implementing health and nutrition education campaigns and improving water and sanitation infrastructure”, says Malawana.

Priceless, Heala and Vitality all propose taxing 100% fruit juice as well.

“The health benefits of fruit juice can be misleading, considering the low fibre and very high sugar and energy content,” says Nossel. “There is also growing body of evidence that supports the link between drinking a lot of fruit juice and overweight, obesity and type 2 diabetes. Combine this with the fact that consumers may start drinking more fruit juice if it is not taxed, and it could have the exact opposite effect on people’s health than this tax intends.”

The Beverage Association of South Africa failed to respond to requests for comment on the tax despite being given two days to do so.

The public can comment on the sugary drinks tax proposals by emailing comments Mmule Majola at mmule.majola@treasury.gov.za and Adele Collins at acollins@sars.gov.za by the end of tomorrow (31 March 2017).

Read More:

Will a sugar tax trim the fat off South Africans?

South Africans consume alarming amounts of sugar and carbs

Worries that ‘sugar tax’ is too low

 
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