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BevSA welcomes call for impact assessment on proposed sugar tax

| Legislation

The Beverage Association of South Africa (BevSA) welcomed the report by accounting and auditing firm KPMG calling for a socio economic impact assessment (SEIAS) of the proposed sugar tax by National Treasury.

In a report titled “Taxing your sweet tooth – Effective nudge or economic burden”, KPMG says that an investigation into how consumers will respond to a tax on sugar-sweetened beverages in terms of their behavioural changes “is strongly recommended”.

BevSA supports the call for an SEIAS on the proposed sugar tax that National Treasury wants to implement from April 2017.

The proposed sugar tax will have a number of implications for the beverage industry, as well as for consumers and the national fiscus. These need to be fully understood before any tax is introduced to ensure there are no unintended negative consequences.

BevSA is committed to partnering with the government to meet its target of reducing obesity prevalence in South Africa by 10% by 2020 as outlined in the Department of Health’s “National Strategy for the Prevention and Control of Obesity 2015-2020”.

BevSA believes though that the targeting of a single product with a tax will not help the government meet its objectives. The tax is discriminatory and will have a disproportionate effect on lower income earners who spend a greater proportion of their budget on food.

There is also a growing body of evidence that shows that a sugar tax on sugar-sweetened beverages doesn’t reduce calorie intake.

As KPMG points out in its report, if the tax is implemented without similar taxes being introduced by South Africa’s neighbours, it is likely to lead to an increase in illegal trade in beverages as it becomes more attractive to purchase the beverages from these neighbouring countries.

If this occurs, as KPMG states, the tax won’t succeed in its revenue-collection ambitions or change consumer behaviour.

There is also a need to understand what this might mean for the beverage industry. Research from Mexico has shown that 1 700 people lost their jobs in the beverage industry with a total of 11 000 jobs lost along the value chain following the implementation of a sugar tax in that country.

BevSA through its efforts and as a contributor to the initiative by the Consumer Goods Council of South Africa is working with the Department of Health to find the best possible solutions to help tackle obesity and the impact it has on the nation’s health.

A copy of the KPMG report can be found here

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