Tag Archive | SSB

Treasury goes with health pundits on sugar tax

Sugar tax threatens jobs say suppliers

With the publication by Treasury of the policy paper on a sugar tax on sugar-sweetened beverages of 2.9 cents percanning gram of sugar, Treasury is set to raise some R3bn from fizzy or carbonated drinks and the possibly of a total R4.5bn from the food and beverage industry as a whole. Others in political circles estimate that revenue could exceed R11bn.

Minister of Finance, Pravin Gordhan, promised that such a tax would be forthcoming in last year’s budget speech. As this figure quoted by the Minister is minuscule in terms of the total country’s overall budget needs and the administration may outweigh the costs of actually collecting it the Minister has pointed out in mitigation that there are easier ways to garner tax revenue.

With that disclaimer, the release from Treasury also says the tax “flows from work undertaken by the health department on non-communicable diseases and obesity.”   They said, “The problem of obesity has grown over the past 30 years in South Africa resulting in the country being ranked the worst in sub-Saharan Africa”.

In the background

sars logoWhat Minister Gordhan says is usually the truth but most of the influence is more likely to be coming from the Ministry of Health.     At the most, Minister Gordhan says that the idea in Treasury is to “nudge consumers into better choices to fight obesity.”  Whether this move will in fact contribute to a cut in obesity deaths remains in the strange area of whether an increase in the price of whisky reduces the number of whisky drinkers.

Treasury is following the theory that by making the cost of cool drinks higher and thus less affordable, it will make sugar-sweetened beverages (SSBs) less appealing to consumers, a theory also which appeals to the Minister of Health whoaaron motsolaedi has been most vocal on the subject.    Such an idea also conforms to sugar-related food and beverages studies conducted by Wits University, they both say.

Not medically holistic?

Most objectors to the idea of a “sin” tax on SSBs say that if one wishes to really succeed in a fight against high obesity rates in SA, then only a whole package of measures will achieve the desired result.    In the UK apparently, where the argument also raged, it was stated that a sugar tax was an impractical answer without a tax on crisps and snacks, a whole range of harmful foodstuffs and, especially with children, other “goodies” sold to them from tuck shops and cafés.

In SA, many have said that to isolate SSBs, when they are sometimes more available than potable water in a number of rural areas, is counter-productive. There will be more “unintended consequences”, they say.

Who suffers most

From a political viewpoint, the Democratic Alliance (DA) and the Beverage Association of SA both echo the same sentiment that all the tax will do is “hurt the poor and will most likely fail in its objective to reduce obesity”. The debate will obviously become quite intense in this area alone.

The DA has already gone on record as saying “It is difficult to compel consumers to eat healthier foods by making unhealthy foods expensive. There are always cheaper, fizzier and sweeter alternatives on offer.” This does of course make that point that SSBs, in their view, are unhealthy.    The DA added it would reject Finance Minister Pravin Gordhan’s proposed sugar tax if its purpose was “simply to raise more revenue under the fig leaf of a public health benefit”.

The proposed date for the enforcement of such a sugar tax is April 1, 2017, and bottlers such as Coca Cola state thatcoke bottle sugar is in most food and drink and they ask how far this form of tax will go.  Already government has announced regulations restricting the amount of salt in most foods, including bread and processed foods, in an effort to reduce the cost to the State in respect of heart attacks.

Health objectives

Dr Aaron Motsoaledi has set out the intentions of the Department of Health (DOH) to reduce obesity by ten percent in South Africa by 2020.

The DA have argued that by that date any sugar tax would have contributed as a major item in driving drive up food prices, whereas the answer they say lies in a “holistic healthy lifestyle campaign”. They have also said that they  would object to Finance Minister Pravin Gordhan’s proposed sugar tax if its purpose was “simply to raise more sweet counterrevenue under the fig leaf of a public health benefit” but its difficult to see how they could stop the tax as most Bills on tax are incorporated in ‘money’ Bills.

The DOH paper on obesity points to a US report that “sugary” drinks may lead to an estimated 184,000 adult deaths each year globally and that South Africa was ranked second in the world. That seems a rather unsupported figure but is an example of the rather extraordinary claims being thrown around.

World view

Most bottlers seem to have unsweetened versions on the market it is noted, so technically the matter remains a consumer choice but marketing people say people don’t like switching.   Confirmed by Treasury is the fact that other countries such as Denmark, Finland, France, Hungary, Ireland, Mexico and Norway have all levied taxes on SSBs.

The DA point out that Mexico is the only case comparable with South Africa with such a large sector of poor and there the tax has failed to reduce obesity. Treasury disagrees and says “a tax on foods high in sugar is potentially a very cost effective strategy to address diet related diseases”.

Written comment on the proposals is invited until 22 August 2016.
Previous articles on category subject
Sugar tax possibilities – ParlyReportSA
SA health welfare starts in small way – ParlyReportSA

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Sugar tax possibilities

Once again, a tax on sweet drinks and beverages arises….

sugar_caneProfessor Melvyn Freeman, head of non-communicable diseases, department of health (DoH), says the department is re-looking at the issue of introducing a sugar tax to encourage South Africans to consume less sugar.

His comment comes as a result of the publication of the World Health Organisation’s Global Cancer Report 2014, which reports that tobacco, alcohol and sweet drinks are driving a rapid growth in preventable cancers.

More than 30% of cancer deaths could be prevented by modifying or avoiding key risk factors, says the fact sheet, and these include tobacco use; being overweight or obese; unhealthy diet with low fruit and vegetable intake; lack of physical activity; alcohol use; sexually transmitted HIV-infection; urban air pollution and indoor smoke from household use of solid fuels.

Poor countries worst hit

More than 60% of world’s total new annual cases occur in Africa, Asia and Central and South America. These regions account for 70% of the world’s cancer deaths. It is expected that annual cancer cases, WHO says, will rise from 14 million in 2012 to 22 within the next two decades. Obesity, particularly with schoolchildren, is considered a problem by DoH locally, according to an earlier report to Parliament by minister of health, Dr Aaron Motsoaledi.

Analysts say, while it is important for governments to encourage people to take responsibility for their own health and make changes to their diet and lifestyle, regulators should consider controlling alcohol and sugar consumption in the same way as tobacco products.

“There is no final decision on a sugar tax as yet, but it is an option that is being considered and we are assessing all relevant factors around this,” says Prof. Freeman. The R12bn South African sugar industry is cost-competitive, consistently ranking in the top 15 out of approximately 120 sugar producing countries worldwide.

Also the sugar industry provides employment in job starved regions often in deep rural areas where there is little other economic activity or employment opportunity. Opportunities for this industry lie ahead and include biomass for renewable energy. In addition, the SA sugar industry has transferred 21% of freehold land under cane from white to black owners since 1994 off a base of 5%.

Sweet story

The South African sugar industry generates an annual estimated average direct income of over R12 billion. Sugar is manufactured by six milling companies with 14 sugar mills operating in the cane-growing regions.  The industry produces an average of 2,2 million tons of sugar per season.  About 75% of this sugar on average is marketed in the Southern African Customs Union (SACU). The remainder is exported to markets in Africa, Asia and the USA.

University of the Witwatersrand School of Public Health director Karen Hofman said it was not clear if a tax on beverages would be feasible, but even if it were, it should not be seen as a silver bullet. “Any regulatory effort will only ever be part of the solution. People should be free to eat and drink what they like, but they need to have a full understanding of what they are consuming,” says Hofman.

She adds that she is unaware of a specific tax on sugar anywhere in the world. “We do know that taxes have been successfully introduced in several countries, including France and Mexico,” says Hofman. Such taxes have been introduced on those who use sugar in some form of manufacturing or food and beverage supplies.

Obesity and SSBs

In the USA, the term sugar-sweetened beverages, or SSBs, is used – which are drinks sweetened with sugar, high-fructose corn syrup, or other caloric sweeteners. They are a significant source of nutrition-less or “empty” calories in the American diet, say some, and a significant contributor to the current obesity epidemic there. In the USA, researchers say that if the taxes are large enough they could reduce consumption and the revenue from these taxes to be used on obesity prevention.

Here in South Africa, Discovery health representatives has publicly cautioned against placing too much emphasis on the link between sugar consumption and preventable cancers.  Their Derek Yach says, “Tobacco remains by far the most powerful single determinant of cancer, accounting for 90% of the lung cancer cases and about a third of all cancer deaths.” He calls for all resources to focus on this area.

In a country like South Africa, with limited financial resources, he says, “a focus on taxes on sugar to reduce cancer is a misplaced policy which will have little impact on cancer incidences and distract people from the major diet issues – which are to increase healthy food intake.”
Previous articles in this category or as background
http://parlyreportsa.co.za//cabinetpresidential/sa-health-welfare-starts-in-small-way/

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