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Sugar tax is a bitter pill - and there's no evidence it will curb obesity

Mar 10 2019 12:48
Graeme Stainbank

President Cyril Ramaphosa told South Africans last year that unemployment was the greatest challenge ever facing the country.

Nobody disagrees. We all witness on a daily basis the devastating ripple effect of unemployment in our cities, neighbourhoods and villages.

However, we believe that the tax on sugary beverages – also known as the sugar tax – is a damaging policy that is harming government’s job creation initiatives.

Government was warned

Before the implementation of the sugar tax in April 2018, the sugar industry repeatedly warned government about diminishing revenue and job losses.

Now that the sugar tax has been in place for close to 12 months, we are in a position to assess its actual impact – R1.3bn in reduced revenue and 10 000 jobs at risk. These are jobs in the canegrowing sector alone, with further jobs at risk in the sugar milling and beverage industries.

To add insult to injury, the sugar tax was increased by a further 5,2% in the 2019/20 budget, which will no doubt lead to more severe revenue losses and translate into more job losses.

Blunt instrument for a complex problem

The fact of the matter is there is currently no concrete evidence that the tax on sugary beverages has had any discernible impact on obesity in South Africa.

Obesity is a multi-faceted problem with many causes – inactive lifestyles, an increasing dependence on cheap junk food and genetics are some of the major factors that contribute to this epidemic.

To show that the sugar tax has a tangible impact on public health, one would need to do an analysis of obesity before and after the implementation of the sugar tax, controlling for other variables.

To our knowledge, no such study has been done.

We therefore think that it is irresponsible to raise the sugar tax – which we know is costing thousands of jobs – when there is no evidence that the tax has made a positive impact on public health.

A momentous blow

The sugar tax has from the outset dealt a momentous blow to the sugar industry that is reeling from the consequences of a prolonged drought, plunging sugar prices and weak protection against cheap imports.

In light of these challenges, we are determined to work with government to ease the dire situation that canegrowers – including small-scale growers, land reform farmers and farmworkers find themselves in.

Canegrowers will in the next few days meet with Trade and Industry Minister Rob Davies to discuss potential diversification strategies and alternative markets for sugar such as biofuels, ethanol production, cane-based packaging and even electricity generation.

The sugar industry is completely behind such innovations and believes it can potentially restore the wellbeing of the sector, make it more competitive and prevent imminent job losses.

Nevertheless, we maintain that government should immediately enact a moratorium on the sugar tax until a thorough and complete socio-economic impact assessment has been done.

This will help secure the jobs of thousands of people, including the future and livelihood of small-scale growers and land reform farmers.

Graeme Stainbank is Chairperson of the SA Canegrowers Association. Views expressed are his own.

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