Sugar rush: The low down on the looming sugar tax
The sugar tax is an attempt to curb SA’s growing obesity and diabetes death rate which is largely caused by sugary beverages.
Response to the announcement earlier this year by Finance Minister Pravin Gordhan that a sugar tax will be levied from 1 April 2017 is growing.
South Africans’ consumption of sugar through processed foods and soft drinks has increased by 33 percent since 1994 and the country consumes about three times more Coca-Cola products than the global average.
Coca-Cola and BevSA’s response
Coca-Cola Beverages Africa (CCBA) says the sugar tax could cost 60,000 jobs. In addition to possible company closures and job cuts, the beverage industry estimates that as many as 15,000 informal spaza shops could close.
The Beverages Association of South Africa (BevSA) has warned that the proposed sugar tax on sweetened beverages will cost the local economy R14 billion, and could push the country into recession.
BevSA has joined bottlers and other players in the local beverage industry in speaking out against the proposed tax, which would see as much as 20 percent being levied on sugar sweetened drinks.
Growing obesity – SA 6th highest
Almost 27 percent of South Africans older than 15 are obese, according to the Organisation for Economic Cooperation and Development (OECD). That’s the sixth-highest rate among 41 countries tracked by the OECD. It’s also the highest of the emerging markets in the group after Mexico, which introduced a tax on sugar-sweetened drinks in 2014.
Death rates in SA are affected by a steady rise in lifestyle diseases. This trend is caused by a shift towards fast foods that are high in calories and low in nutrients. Coupled with obesity, and often disguised by it, is prevalent undernourishment.
Diabetes – 2nd leading cause of death in SA
Linked to regular cold drink consumption
Diabetes, in many instances preventable, came in as the second leading cause of death for South Africans aged 15-49 by 2011. By 2030, Priceless SA projects that adult diabetes will bump up healthcare costs by some R14-billion.
In a 2015 study published in the British Medical Journal (BMJ), a team of Cambridge researchers explored the link between type 2 diabetes and regular cold drink consumption. Analysing data from 17 observational studies (including 310,819 cases of type 2 diabetes), they found that risk for type 2 diabetes increased by 18% for each additional sugary beverage consumed daily, regardless of weight. An earlier 2010 meta-analysis estimated that individuals consuming 1-2 cold drinks a day faced a 26 percent higher risk for type 2 diabetes than those who didn’t.
Fizzy drinks and sugar
A single fizzy drink contains about 10 teaspoons of free sugars. The World Health Organisation (WHO) recommends that added sugar be limited to a maximum of six teaspoons of free sugars per day – one fizzy drink and you’re already well over the threshold.
In urban South Africa, fizzy drinks account for 10.3 percent of daily calorie intake – just a little behind Mexico at 12 percent, which held the unenviable title of the country with the highest death rate linked to sugary beverages in the world before implementing a sugar tax.
Mexico sugar tax success story
Empirical evidence from Mexico a year after their 10 percent tax was implemented showed a 6 percent decline in fizzy drinks sales. This potentially equals a huge healthcare saving as well as what the revenue could be used for.
In the South African context, that additional revenue comes to R7-billion if the tax is set at 20 percent.
From being a healthy country, 71 percent of Mexico’s adult population became overweight or obese. Sugary drinks contributed 70 percent of the added sugar in the Mexican diet. In 2012, an average Mexican drank 163 litres of sugar-sweetened drinks a year.
Faced with overwhelming obesity rates, in January 2014 Mexico became one of the first countries in the world to impose a tax on sugary drinks.
The BMJ report on Mexico
In January 2016, the Instituto Nacional de Salud Pública in Mexico and the University of North Carolina published in the British Medical Journal their first analysis of the effects of the sugar tax there.
On average, a percent drop in sugary drink purchases was achieved in 2014. By the end of 2014, a 12 percent fall had occurred. Among the poorest households, the annual average sale of sugary drinks dropped by 9 percent and by December 2014, sales had decreased by 17 percent. Sales of bottled water and beverages with no added sugar increased by 4 percent.
A negative aspect of the sugary beverage tax in Mexico is that the revenue raised is not being directed to the prevention of obesity.
Use the tax for health campaigns
Professor Harry Dugmore of Rhodes University’s Centre for Health Journalism says the tax should be used to subsidise fruit and vegetables and low-cost proteins. He says the tax would be more powerful if government overlays it with mass health campaigns – campaigns in schools, campaigns in clinics.
