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Sugar tax confirmed for South Africa in 2017

| Economic factors

South Africans with a sweet tooth will be punished with a higher tax on sweet stuff. In his budget speech on Wednesday, Finance Minister Pravin Gordhan announced that a sugar tax will be levied with effect from 1 April 2017.

A sugar tax has been mooted by a growing number of consumer bodies and health experts who have been calling for a tax on sweetened sugar beverages (SSBs) to help curb the tide of obesity in SA, which is the foremost cause of obesity in Sub-saharan Africa.

Fin24 reported on Wednesday that there was speculation that an announcement could follow in the budget speech.

“This year, in view of the need to raise additional revenue and reduce the budget deficit, we have paid special attention to the fairness and inclusivity of the  tax system,” stated Gordhan.

Among the tax proposals put on the table by the minister is an “introduction of a tax on sugar-sweetened beverages”.

Consuming large amounts of sugar puts people at high risk for lifestyle diseases like diabetes, stroke and obesity.

Research by the University of Witwatersrand found that a suggested 20% tax on SSBs could possibly reduce obesity in 220 000 adults.

SSBs include the following: still and carbonated soft drinks, fruit juices, sports drinks, energy drinks and vitamin waters, sweetened ice tea, lemonade, cordials and squashes. Other countries that have introduced a sugar tax include France, Mexico and several states in the US.

“We’re very impressed with Treasury for taking this step forward,” said health sociologist Aviva Tugendhaft, deputy director of research programme Priceless SA at the Wits School of Public Health.

She said they will continue to provide evidence that supports this approach.”Our research shows the significant impact that a SSB tax will have on improving the health of the country and generating revenue,” said Tugendhaft.

“In order for the full health benefits to be achieved a SSB tax will need to be part of an even wider comprehensive approach to address obesity and its related diseases.”

Tugendhaft said this will have to include things like easy to understand food labelling, advertising regulations and making healthier foods more affordable, among others.However, Ernst Janovsky, senior agricultural economist with Absa noted with concern that a sugar tax will hit the sugar industry.

Janovsky said this new tax will lead to a decline in sugar usage, resulting in lower domestic sugar prices which will have a negative impact on the sugar industry.

Meanwhile, smokers and drinkers will again be heavily taxed.

The duty on a packet of 20 cigarettes will up from R12.43 to R13.24, and that on a can of beer (340ml) from 124c to 135c.

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