Should South Africa shelve its sugar tax?

South African Sugarcane growers are unhappy with the country’s sugary beverage tax which they say has cost the sugar industry R1 billion ($70.76 million) so they have called on finance minister Tito Mboweni to shelve the tax, but would this be the best decision for the country?

South African Cane Growers’ Association chair, Graeme Stainbank argues that the tax, which the government said would help in reducing obesity in the country, has an impact on the economy and jobs and until a thorough assessment of its impact is carried out, the tax should be shelved.

In 2016, when the government proposed the tax, the Beverage Association of South Africa (BevSA) questioned the government’s decision to target beverage drinks alone rather than the entire processed food industry, saying that drinks alone cannot be blamed for obesity.

Obesity is a serious health issue that puts people at a higher risk for serious diseases, such as type 2 diabetes, heart disease, and cancer. According to Healthy Living Alliance, South Africa has the highest obesity rate in Sub-Saharan Africa, with almost 70 percent of women and 39 percent of men being overweight. Even the United Nations Children’s Fund says South Africa has the highest rates of obese children in the world, with 13 percent of obese children under the age of five living in the country.

Asides the obesity issue, there is an alarming number of people suffering diabetes in the country. As of 2017, there were over 1.83 million of the approximately 58 million South African populace suffered diabetes. That is 5.4 percent of the adult populace with a technically incurable illness.

The Cane Growers’ Association chair said the sugar tax in the country has made soft-drink manufacturers to reduce bottle sizes and the sugar content of their products and this has led to a drop in the demand for sugar.

While this might seem like a business challenge that may spiral into an economic challenge, especially as the data gathered by cane growers in the country say that the sugar tax has cost the industry R925 million in the 2018/19 season which runs from April 1 to March 31, the Sugar tax may be first of several health promotion measures in the country.

A can of a carbonated drink contains nearly 10 teaspoons of sugar and the World Health Organisation recommends the consumption of not more than 12 teaspoons of added sugar per day. People should keep the daily intake of sugar under six teaspoons as there are health benefits to doing so.

Without the tax, beverage companies like Coca-Cola would not cut down on the sugar content of their beverages. The Sunday Times reported that Coca-Cola was reeling from the effect of the sugary beverages tax as well as “economic headwinds” which resulted in lower volumes. Following the introduction of the tax, Coca-Cola cut the sugar content in its beverages by 20 percent across all brands.

Quite alright, drinks are not the only containers of sugars, foods, especially carbohydrates do as well. The body breaks down or converts most carbohydrates into the sugar glucose. While South African government have said the tax is a step to curb obesity, scientists have rebuffed claims that sugar and the lack of exercise causes obesity.

Thanks to imposed sugar tax in different countries world wide, American multinational food-manufacturing company, Kellogg’s, noted that it would reduce the sugar in its Rice Krispies and Coco-Pops cereals. Even Nestlé said it had reduced the sugar content of its Milo beverage by 32 percent and that Milo now contains less than 5 percent sucrose, equivalent to two teaspoons of sugar.

Sugar taxes may not be a panacea for obesity but South Africa’s sugar tax,
which is fixed at 2.1c/g of sugar content exceeding 4g/100ml, has demonstrated that taxing the sugar industry can be effective in persuading manufacturers to reduce sugar contents in their products.

South Africa’s Treasury deputy director-general, Ismail Momoniat stated that the tax had just been introduced in South Africa and would not be shelved, though it would be reviewed at some stage to assess its impact on the industry and on obesity.

However, if the health of the citizens is a priority, the tax is expected to remain for the foreseeable future.