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Sugar tax “pro poor” says health expert

As more parties refute industry’s job losses claims, some argue the cost of inaction is much higher to society.

Sugar drink. Credit: Taku/Flickr

Sugar drink. Credit: Taku/Flickr

The soft drink industry’s job loss claims and resulting damage to the economy is nothing compared to the cost of not taxing sugary drinks, according to Karen Hofman who heads up Priority Cost Effective Lessons for System Strengthening South Africa (PRICELESS SA).

“Excessive sugar consumption is costing us lives, which is the worst part, but it is also costing the economy,” she said, speaking to international nutrition and public health experts at the World Nutrition Congress taking place in Cape Town this week.

Industry, in the form of the Beverages Association of South Africa (BevSa), has claimed that up to 72 000 jobs will be lost if the government adopts the proposed tax on sugar-sweetened beverages (SSBs).

Announced by finance minister Pravin Gordhan earlier this year, the proposed regulations would see all SSBs taxed by 20% in an effort to combat the country’s growing epidemic of non-communicable diseases (NCDs) including obesity, diabetes and heart disease.

Job losses

The job loss claims were based on a study by the consulting company Oxford Economics, and was paid for by BevSA, but has been challenged this week by Trade and Industry Policy Strategies (TIPS), an independent research non-profit organisation.

TIPS’ Neva Makgetla said the figures “vastly overstate the number of jobs that depend on the production of sugary beverages” which Hofman said is unsurprising because companies routinely exaggerate the employment impact of regulatory measures in order to sway public opinion.

In the BevSa’s submission to Treasury, they claim that the tax will reduce South Africa’s gross domestic product (GDP) by 0.4 percent.

But whether these claims are credible or not, a 2016 report from the United States Chamber of Commerce stated that the impact of NCDs on South Africa’s GDP for 2015 will be a staggering 6.8 percent.

Cost of inaction

Using estimates of the impact these diseases have on absenteeism, presenteesism (working while sick) and early retirement the study predicted the impact on the GDP to rise to 7 percent by 2030.

South Africa already has the highest obesity rate in Africa and according to the International Diabetes Foundation the country’s diabetes incidence stands at 10 percent, and is above the global average.

Hofman said that already over a third of premature deaths from NCDs in South Africa occur in people under the age of 60 and will continue to affect the young economically active population unless urgent action is taken.

She said the country is eighth in the world in terms of its sugar consumption and that fiscal measures were the necessary first step in addressing sugar’s impact on the increasingly ailing health of South Africans.

Impact on the poor

BevSA has claimed that the regressive tax would unfairly affect the poor as rich people would still be able to easily afford higher-priced products.

“The economic reality is poor people cannot afford quality health care and are the people likely to die prematurely from NCDs, creating a poverty spiral,” argued Hofman.

She said poor health and disability will diminish the labour force capacity, affecting the economy, but will also increase inequality as poor people will continue to lack the health and resources to raise their standard of living.

“The more wealthy in South Africa will reduce consumption of SSBs a little or not at all because they can afford to, but the main beneficiary of this tax in health terms will be the poor,” she said. “And the gap between the health of the rich and poor can be reduced. While the industry calls that regressive, that’s what I call progressive.” – Health-e News

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