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Sugar tax could cost 70,000 jobs, says study

| Economic factors

The Beverage Association of SA, whose members include almost all manufacturers of non-alcoholic drinks in the country, has warned that up to 70,000 jobs in the industry could be lost if the Treasury’s mooted tax on sugar-sweetened drinks were implemented in its current form.

This is the first time the industry has put a number to the potential ramifications for employment since the proposed tax was published for public comment in July.

The findings are based on an independent study conducted by Oxford Economics and commissioned by the association.

The study found the proposed tax would result in 60,000-70,000 workers losing their jobs. About 60% of the jobs lost would be direct, upstream jobs, says the report.

SA would be following in the footsteps of countries such as Mexico, Mauritius and Hungary, which have implemented the tax to tackle rising obesity and diabetes rates.

Experts forecast that the proposed levy could raise up to R4.5bn in revenue, relieving pressure on the fiscus. However, having already shed about 500,000 jobs in 2016, the country can ill afford to lose any more.

The Treasury’s proposal is for a tax of 2.9c per gram of sugar in all sugar-sweetened drinks. This could raise the price of popular soft drinks, such as Coca-Cola, about 20% — making the tax rate one of the highest in the world. In Mexico, which has a similar tax, the rate is about 10%.

On Tuesday, Phil Gutsche, chairman of Coca-Cola Beverages Africa, the largest bottler of Coke products on the continent, called on stakeholders to assist the industry in opposing the proposed tax to save jobs.

Beverage Association of SA executive director Mapule Ncanywa said the organisation had told the Treasury on numerous occasions that taxing a single category of food would not be effective in tackling obesity and diseases, such as diabetes, that resulted from excessive sugar intake. Sugar-sweetened beverages accounted for only about 3% of total daily calorie consumption, she said.

"If sugar is the problem, why not go straight for the source?" asked Ncanywa.

The Food and Allied Workers Union (Fawu) said it supported the government’s initiatives to tackle health challenges in the country. But it said it would have a problem with the proposed tax if it resulted in the volume of job losses the industry predicted.

"We cannot add an extra 70,000 workers to our existing army of unemployed," Fawu general secretary Katishi Masemola said.

The deadline for public comments on the policy paper is August 22.

The Treasury has said the tax will come into effect in April 2017.

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