The new tax on sugar-sweetened drinks will have to form part of an integrated programme to change consumer behaviour and subsequently play an important role in addressing a range of health issues, says Ettiene Retief, Chairperson of the National Tax and SARS Stakeholders Committees, South African Institute of Professional Accountants (SAIPA).

Retief’s statement comes in light of Finance Minister Pravin Gordhan’s National Budget Speech that is to take place on 22 February wherein it is anticipated that he will confirm the implementation of the widely-debated proposed sugar tax.

“The tax on its own will raise a relatively small amount of money for the fiscus and would be unlikely to yield the full extent of the expected change in consumer patterns on its own. To do that, the government needs to implement a supporting educational and health awareness programme,” Retief says.
However, it is important to note the health issue not only refers to obesity, but also diabetes, heart decease and tooth decay.

Substitute drinks
Global experience with tobacco and alcohol shows many variables have to be taken into account, including whether there is an attractive substitute product. In this case, mineral waters and sugar-free beverages are readily available. However, some consumers may simply shift to cheaper sugar-sweetened brands, highlighting the need for a complementary public-education and awareness programme.

Recently, the experience of the Californian town of Berkeley has shown that a general excise tax combined with a public-awareness campaign can yield good results. After a “soda tax” was implemented, there was a 21 percent drop in the consumption of sugary beverages, and a 63 percent increase the drinking of bottled or tap water. Only 2 percent of those surveyed said that they had begun shopping in nearby cities where the tax was not implemented.

Redeployed versus unemployed
The argument is often made that reduced consumption will inevitably mean the loss of jobs along the beverage supply chain. However, the quantum of lost jobs is hotly disputed, Retief points out. “In addition, if consumers shift to sugar-free beverages or mineral water, it seems likely that workers could simply be redeployed—especially as most manufacturers of sugar-based beverages also have well-established low-calorie or water alternatives. But even if a few jobs are in fact lost, a sensible health policy is a moral imperative especially when it comes to protecting children.”

A more aggressive argument could be that a sugar tax could open up opportunities for smaller, local companies to supply alternative beverages. This would potentially mean the creation of new jobs and a boost to empowerment.

Poor health equals high costs
Another point to keep in mind is the high cost to the country of the diseases and chronic conditions linked to excessive sugar intake. This includes direct cost to the health care system, plus lost productivity.

World Health Organisation figures indicate that 1.5 million people died in 2012 as a result of diabetes and other chronic conditions linked to high-sugar diets. More worrying, it believes that 42 million children under the age of five are obese, a huge increase from 11 million only 15 years ago. The Berkeley study also revealed that the “soda tax” had the most impact on the lower income groups and children.

ENDS

 MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za
For more information on SAIPA please visit:
Website: www.saipa.co.za
Twitter: @SAIPAcomms
LinkedIn: South African institute of Professional Accountants Company
Facebook: South African Institute of Professional Accountants

The proposed sugar tax is being hotly contested by industries faced with major changes if the tax is implemented. Most recently, job losses have been indicated as consideration to not go ahead with the implementation of the tax. The flipside of the coin is however the growing health risks and its costs to the economy.
 
“The future workforce is under threat of serious illnesses due to the overconsumption of sugar,” warns Ettiene Retief, Chairperson of the National Tax and SARS Stakeholders Committee at The South African Institute of Professional Accountants (SAIPA). “Serious intervention is needed to ensure that the taxpayer of today is around to pay their taxes and boost the economy of tomorrow.”
 
A recent study has presented interesting data with South Africa at the second highest ranking, ahead of the USA, with regards to the number of deaths attributed to sugar. Heart disease, cancer, and type 2 diabetes are all common diseases linked with the high consumption of sugar. A sugar tax should not only be regarded as another tax, nor that obesity is the only risk.
 
Hindering economic growth
Government’s plans for national growth is hindered by the costs related to high incidents of sugar related illnesses as taxpayers spend on healthcare instead of other areas, resulting in limited economic growth.
 
This limited economic growth has far greater impact on a larger number of people than the reasons held against implementing a sugar tax in South Africa.
 
There have been no reports of massive job or financial losses from countries where sugar tax have been implemented. On the contrary, the introduction of a one peso per litre tax on soda and other sugary drinks by the Mexican government saw in 2014 a drop of 10% in the purchase of soda and other similarly taxed drinks, balanced by an increase of 13% in purchases of bottled water.
 
In many cases, the manufacturers of sugary drinks also have bottled water and sugar free drinks product options.
 
Healthier choices
Consumers will continue to purchase beverages, but may now make healthier and more informed decisions. It was recently reported by Cancer Research UK and the UK Health Forum that a 20 per cent tax on sugar drinks could reduce the obesity rate in the UK by 5 per cent by 2025.
 
It is unlikely that job losses would be as significant as the claimed 60 000, which is published without any supporting evidence thereof. Doing nothing has an increased burden and cost with regards health care. Let’s not forget that the companies that make drinks with added sugar also make the sugar-free alternative. The beverage industry has known for many years that a sugar tax was likely to be introduced, and the various companies should have planned accordingly.
 
Traditionally we have thought of sin taxes as not having any significant kind of impact on changing people’s behaviours and habits. Empirical evidence suggests that people won’t stop smoking because of a tax, but we have seen a significant reduction per capita consumption of 40% in the consumption of tobacco products over a ten-year period, attributed increased taxes and regulations.
 
Consumer awareness
We can’t simply apply a sugar tax to make the high-sugar products more expensive, we need to also focus on consumer awareness and the comparative pricing of alternatives, and the sugar taxes collected should be used to fund aggressive education campaigns on healthier alternatives.
 
Marketing, advertising and packaging practices could also be regulated, with an introduction of warnings about the levels of sugar in certain foods and drinks, and the health risks, similar to the warnings on tobacco products. Selling of high-sugar drinks should be limited at schools. This would be enormously beneficial in South Africa where levels of education impact on understanding around how sugar can damage health and well-being. One thing is certain – we can’t simple ignore the problem!
 
ENDS
 
MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za,  www.atthatpoint.co.za  
 
For more information on SAIPA please visit:
Website: www.saipa.co.za
Twitter: @SAIPAcomms
LinkedIn: South African institute of Professional Accountants group
Facebook: South African Institute of Professional Accountants