Sugar tax bill delayed as hearings continue | Fin24

Sugar tax bill delayed as hearings continue

Jun 04 2017 06:01
Janet Heard

Cape Town - The sugar industry will most likely be heartened by the possibility that a debate around the sugar tax might see the finalisation and implementation of the tax delayed until late this year or even next year.

After day one of a third set of parliamentary hearings this week, Yunus Carrim, the chair of the standing committee on finance, warned that deliberations around the tax on sugar-sweetened beverages could not continue “endlessly”.

However, he said that, given the complexities that had emerged, “we will not plunge into voting on the bill before the end of the parliamentary term in June”. Instead, Parliament would continue to debate the bill in August.

He urged the National Economic Development and Labour Council (Nedlac) task team to conclude the process swiftly.

“Nedlac has the capacity to find a significant degree of consensus, and we urge that the Nedlac process be completed relatively soon,” he told City Press, adding that if there were delays, Parliament may press ahead.

“Ideally, we would vote on the bill after the Nedlac process, but, at the very least, we will consider the progress in Nedlac before we vote,” he said.

The health science fraternity and the sugar industry locked horns over the pros and cons of the proposed tax during the hearings.

MPs appeared to be convinced of the negative effect of sugar on the health of the nation, though they differed on the solution and questioned possible unintended consequences of a tax.

Carrim told MPs that scientists and academics had been “overwhelmingly convincing” about the negative effect of sugary drinks.

In South Africa, a typical 330ml sugary beverage contains eight to 10 teaspoons of sugar. The country is battling diabetes and obesity, which is prevalent in 70% of women and 31% of men.

“The crisis in healthcare is clear,” said Carrim, adding that the challenge was to strike a balance between the negative health effects of sugar and the effect a tax would have on the industry and jobs.

Treasury estimated job losses would be between 2 000 and 7 000, while the sugar industry set the figure as high as 70 000.

Concessions have already been made to the industry, with the levy dropping by half from an initial 20%.

The proposed new levy is at a rate of 2.1c per gram of sugar, with an exemption on the first 4g per 100ml. Concentrates like Oros are to be taxed at a lower rate of 1.05c per gram.

Treasury deputy director-general Ismail Momoniat said: “We have lowered the tax significantly to the point that we have been accused by some of selling out.”

At the hearings, some health specialists advocated a 20% or 30% levy to be imposed.

Marco Zampoli, representing the SA Paediatric Association, pointed out that South Africa had one of the highest rates of sugary drink consumption among9- to 10-year-olds in the world, and that child obesity affected mostly the poor.

Anecdotally, he said an eight-year-old boy, weighing 86kg, was admitted to the Red Cross War Memorial Children’s Hospital in Cape Town last year. He had severe breathing difficulty and high blood pressure. He was attached to life support machines for three days, but the only cause of the child’s illness that could be found was that he drank 2 litres of fizzy sugary drinks a day “because it tasted nice and was cheap”.

The SA Sugar Association’s Suresh Naidoo acknowledged the health concerns, but said the industry, which indirectly employed 350 000 people, was already “under siege” and a tax would have a negative effect. He called for the levy to be withdrawn “in its entirety”.

Cosatu and Business Unity SA called for the levy to be delayed pending further consultation and research regarding consequences and alternatives.

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