Sugar tax will cost jobs – Cosatu

Johannesburg - Labour federation Cosatu has expressed concern that the proposed tax on sugar-sweetened beverages may lead to the loss of thousands of jobs in the sugar industry.

Making a submission this week on the proposed tax at a public hearing hosted by Parliament’s committees on finance and health, Cosatu’s parliamentary liaison officer, Matthew Parks, said the trade union feared the effect that the sugar tax – proposed to begin on April 1 – would have on jobs.

Cosatu is South Africa’s largest trade union, boasting more than 2 million workers, and is part of the tripartite alliance with the ANC and the SA Communist Party.

Parks compared Treasury’s estimate of 5 000 job losses to the figure mooted by the SA Cane Growers’ Association – a 5 817 job loss – adding that the sugar industry employed 79 000 workers on 22 300 farms.

The cane growers’ association further estimates that the sugar tax will reduce farm incomes by between 15% and 30%. It goes on to question the affordability of the proposed tax at a time when one out of two farms are heavily indebted and one out of three emerging farms fail.

Parks said about 15 000 jobs in the sugar sector had been lost because of lower global prices.

He added that 2016 saw 52 000 job losses in the mining sector, 10 000 in the retail sector and 1 000 in the banking sector. Vacancies in the public service and at universities had been frozen, and thousands of posts at Telkom and the SA Post Office outsourced.

He made reference to last month’s 1 350 job losses in the poultry sector and the laying off thousands farm workers over the past 20 years.

Parks said all this was against the background of the reduced mining sector workforce from more than a million 20 years ago to current estimates of 400 000.

In addition, he said, 100 000 jobs were lost in the textile industry in the 1990s when government lifted tariffs “too quickly”, and the number of Telkom staff had shrunk from 50 000 to 5 000.

“Throughout all these massive job losses, government has shown itself to be unwilling or unable to protect jobs, to intervene timeously to save jobs or even to create jobs,” said Parks.

He added that an estimated 79 000 workers were employed in the sugar industry, particularly on sugar farms and mills in KwaZulu-Natal and Mpumalanga.

“Government does not appear to have any plan to prevent its estimated 5 000 jobs losses,” he said.

“The silence of Treasury and the department of health on this matter indicate that they view such job losses for those families’ breadwinners as necessary collateral damage,” he said.

He said Treasury needed to be careful about overtaxing an already heavily taxed and poor nation.

Healthy Living Alliance, an alliance comprising 10 health and social justice organisations, supported the proposed sugar tax.

Its representative, Tracey Malawana submitted that taxes on sugary drinks were particularly effective in reducing consumption and improving health among lower-income consumers, who were responsive to price increases and suffered disproportionately from the ill effects of obesity.

Professor Corné van Walbeek, the principal investigator in the Economics of Tobacco Control Project at University of Cape Town, said public health concerns drove the decision to raise the excise tax on tobacco products in the 1990s and that, thanks to these tax changes – more than any other tobacco control interventions – a dramatic reduction in smoking had occurred.

He was dismissive of predictions that up to 60 000 jobs might be lost because of the sugar tax, saying parties involved in the tobacco industry made similar alarmist claims in the late 1990s, when government announced that it would increase excise tax on cigarette tax to 50% of its retail price. Despite scare tactics, legislation was passed and as a result, the population had benefited from smoke-free places and not being bombarded by tobacco advertising.