Ricochet News

Sugary drinks tax cautiously welcomed

Feb 22, 2017
Sugary drinks tax cautiously welcomed

The Healthy Living Alliance (HEALA) welcomes Finance Minister Pravin Gordhan’s announcement that a tax on sugary drinks will be introduced within a year and that part of the proceeds will be used to fund health promotion interventions.

However, HEALA is disappointed that the proposed level of taxation has been reduced significantly and it might not be sufficiently high to deter consumption of these drinks. It appears from the Budget Review that the tax will be in the region of 11% instead of the 20% tax rate (based on a 330ml can) proposed in Treasury’s policy paper.

Theproposed tax rate is now 2.1c/gram for sugar content in excess of 4g/100ml. Yet Treasury first proposed that the tax was going to be levied on all sugar in drinks without any exemption.

While HEALA welcomes the fact that the tax will now cover all sugary drinks including 100% fruit juice, it is disappointed that fruit concentrates will only pay 50% of the tax.

South Africa has the highest obesity rates in Africa. These diseases now rival the prevalence of HIV in South Africa. It is a major risk factor for diabetes, strokes, heart disease and some cancers. These and other non-communicable diseases (NCDs) in combination cause one in three deaths among South Africans under the age of 60. Diabetes alone claimed an average of 62 lives a day in the country in 2014, with 10 000 new cases of diabetes being registered in the public sector each month. The cost of treating NCDs is 6.8% of GDP.

“Tackling obesity should be a national health priority,” says HEALA coordinator, Tracey Malawana. “While there is no silver bullet that will slim down the nation, cutting sugar consumption is a non-negotiable public health measure. Sugary drinks are a major contributor to excessive sugar intake.”

Economic modelling done by the Wits School of Public Health’s think-tank PRICELESS SA (Priority Cost Effective Lessons for Systems Strengthening) indicates that a 20% tax on these products would result in 220 000 fewer obese South Africans and contribute up to R7-billion in revenue that could be used to fund health initiatives.

Director of PRICELESS SA, Prof Karen Hofman, says: “When we introduced increased taxes on tobacco, smoking decreased from 40% to 20% of the adult population. This tax also will save lives, increase life expectancy, avoid impoverishment and avert huge costs to economy. There is a pressing need to commit to this tax without further delay.”

HEALA commits itself to continued advocacy to support the passage of the enabling legislation, and to working with government to increase public awareness of the damaging impact of sugary drinks. The goal is to ensure that this tax is a meaningful public health instrument and not just a revenue-collecting tool.