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How sugar tax will create future taxpayers

Aug 24 2016 21:30
Carin Smith

Cape Town - A sugar tax should be seen as part of the serious intervention needed to ensure the taxpayer of today is around to pay their taxes and boost the SA economy of tomorrow, Ettiene Retief of the SA Institute of Professional Accountants (Saipa), told Fin24 on Tuesday.

The decision to put a tax on sugar sweetened beverages (SSBs) was mentioned by Treasury as part of the 2016 budget. The tax is only due to begin in 2017.

"South Africa's future workforce is under threat of serious illnesses due to the overconsumption of sugar," said Retief, who chairs the institute's national tax and SA Revenue Service (Sars) stakeholders committee. In his view, claims that a sugar tax would lead to job losses should, therefore, be compared to the flipside of the coin, namely growing health risks and the resulting costs to the economy.

The proposed tax on SSBs has the potential to reduce the industry’s contribution to SA’s gross domestic product (GDP) by R14bn and trigger 62 000 to 72 000 job losses, the Beverages Association of South Africa (BevSA) claimed on Tuesday.

Retief, however, is of the opinion that this extent of job losses is probably grossly exaggerated and it is unclear how it was calculated.

READ: Sugar tax to cost SA 60 000 jobs, warns Coca-Cola

"I am not saying consumers will stop drinking these drinks because of the tax, but awareness of the tax could change how they consume by opting for alternatives," said Retief.

"Consumers won't stop drinking. When a sugar tax was introduced in Mexico, for example, there was an increase in purchases of alternative drinks. So, one could argue that to meet that increased demand would recapture jobs lost."

He finds it ironic that "the same industry that denounced a sugar tax, claiming it will not work, is now saying it will work so well that there could be a loss of 60 000 jobs".

"We cannot sit by and do nothing. For years there has been talk about a possible sugar tax, so why is the industry only reacting now when it could become a reality?" he asked.

Retief is in favour of a sugar tax if it goes hand-in-hand with educating consumers and helping them to change their behaviour.

ALSO READ: Sugar tax could slash GDP by R14bn - BevSA

The Department of Health (DoH) said on Tuesday the sugar tax is aimed at reducing a growing "non-communicable disease epidemic and oral health problems".

"There is good reason to believe from both local experience with tobacco and alcohol and international experiences with sugar (as well as tobacco and alcohol) that taxes are an excellent mediator of consumer behaviour," it said in a statement.

It said that without a tax soft drinks are projected to grow by 2.4% per year, predominantly among poorer people. This could lead to a 16% increase in obesity by 2017 of which 20% would be due to SSBs.

"SSBs are seen as a good target for taxation, because, among other things, they account for around one-third of all sugar consumed by the average South African and such a tax has already been implemented with varying amounts of success in other lower and middle-income countries," the department said.

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tax  |  sa economy  |  sugar tax  |  health

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