South African Treasury proposes 20% tax for soft drinks

South Africans will now pay through their noses to drink soda, as the Treasury declared, Friday, in proposals for a tax on sugar outlined in the budget in February. The Treasury has proposed a 20 percent tax on sugar-sweetened beverages in a bid to curb consumption and reduce obesity.

The Treasury said in a statement that the sugar tax proposals were in line with “growing global concern regarding obesity stemming from overconsumption of sugar.”

Finance Minister Pravin Gordhan had during February’s budget speech introduced the tax, partly as a way to tackle the country’s growing budget deficit and reduce obesity.

According to a research by the University of Witwatersrand, a suggested 20 percent tax on sweetened sugar beverages (SSBs) tSSBs could possibly reduce obesity in 220 000 adults. Smokers will not be spared in the new tax regime, nor will consumers of alcohol. The duty on a packet of 20 cigarettes will increase to R13.24 from R12.43 and on a can of beer (340ml), a duty of 135c will now be paid.

An average South African takes about 17 teaspoons of sugar daily, more than 10 teaspoons recommended by the World Health Organization (WHO). The WHO, in a 2014 estimates, says one in four South Africans are obese.

The Beverage Association of South Africa (BevSA) has questioned the government’s decision to target just drinks rather than the entire processed food industry in its fight against obesity, arguing that drinks cannot be singled out for blame in this issue.

In addition to the published proposals on sugar tax, are two bills to change tax policy in South Africa. The Treasury has invited public comment on them.

If everything goes as planned by the Treasury, South Africans will start paying a sugar tax from April 1, 2017.