Sugar tax will not stop obesity, says BevSA

Tax on sugar-sweetened beverages will not achieve a long-term sustainable solution to the obesity problem.

The beverage industry looks forward to continuing to engage with Department of Health and National Treasury on the proposed tax on sugar-sweetened beverages (SSBs) during the World Nutrition Conference in Cape Town this week, but cautions against overstating the impact such a tax would have on long-term obesity rates in South Africa. As we have publicly stated, we are committed to finding workable solutions based on moderation of sugar intake. BevSA members have already begun to progress reducing daily energy intake from SSBs and have committed to a reduction of between 59 and 75 kJ per capita by 2020; double the energy reduction the tax is expected to achieve. The industry members have further offered to subject such progress to external verification.

We strongly support undertaking a total dietary study that will provide industry, government and consumers with accurate data. While there is a gap in up-to-date data/research into current SA total dietary consumption, our calculations based on published information and our own data shows SSBs account for just 3% of daily kilojoule intake in South Africa.

The Food and Agriculture Organization data up to 2011 (latest available) shows that the largest contributors to the rise in energy intake from 1991 – 2011 have been other kilojoule-rich foods such as vegetable oils (up 440 kJ per day), and cereals (up 213 kJ per day).

It is therefore not surprising that Treasury’s own policy paper finds that the proposed SSB tax will lower average energy consumption by only 36 kJ per day (0,3%), equivalent to a stick of celery. Under this scenario, obesity rates are estimated to fall by 3,8% for men (0,5 percentage points overall), and 2,4% for women (0,8 percentage points overall).

These reductions would be extremely modest improvements, if any at all, to current obesity rates: namely from 13,5% to 13% for men, and from 42% to 41,2% for women. However, as noted, the high degree of uncertainty around this number means the energy reduction from the tax could be as little as 9 kJ. This modest decrease in consumption would come at the cost of a proposed tax rate that hits an international high of 20% (effective weighted average rate of 25%) with attendant economic risks.

One of the major limitations of studies on the effects of a mooted tax on SSBs is the lack of frequent, all-inclusive South Africa-specific consumption studies. Treasury has instigated its fiscal intervention policy paper without having conducted a socio-economic impact assessment study, and with limited baseline information on the consumption patterns of South Africans and the behavioural effects of such a tax are at best inconclusive.

To be effective over the long term, any intervention by government should take into account the findings of a total dietary intake study. The beverages industry also welcomes a thorough investigation into evidence-based alternatives to the SSB tax.

BevSA supports the Department of Health’s efforts to reducing obesity and other Non-Communicable Diseases (NCDs). However, it believes that there are more effective solutions than a tax on a single-product category that ignores total caloric consumption. As in the case of the recently implemented salt restriction regulations in foodstuffs, which encourage innovation and adaption from industry while achieving government’s health objectives, a public-private partnership between industry, government and the scientific community is widely recognised as a better solution to reduce obesity and other non-communicable diseases than a dubious fiscal measure with unintended economic consequences. BevSA members have committed to reducing daily energy intake from SSBs by 59-75 kJ by 2020 through changes such as reformulation, increasing the share of no- and low-calorie drinks, and changes to pack size. This would provide double the energy intake reduction of the proposed tax, with none of the adverse economic consequences.

In fact industry and the DOH have started on a path that offers a holistic solution to this complex problem of obesity. The Healthy Food Options Forum already contains comprehensive obesity reduction measures that should be taken into account by Treasury’s socio-economic review.

The industry stands ready to work together with government to promote solutions that will not cost thousands of South Africans their jobs.