Bloomberg reported that Coke bottler, Coca-Cola Beverages Africa, will rethink its spending plans in South Africa should the proposed tax on sugary drinks be implemented in 2017.
The government has proposed a 20% tax on sugar sweetened drinks. Finance Minister Pravin Gordhan announced earlier this year that a sugar tax will be levied with effect from 1 April 2017.
CCBA was formed through a combination of SABMiller and Coca-Cola African soft drink operations.
Bloomberg reported that while neither Coca-Cola nor the bottling group are opposed to taxes, they believe that the proposal is discriminatory and will have a “huge economic impact,” Vukani Magubane, public affairs director for Coca Cola Southern and East Africa, said on Thursday.
“Commitments around jobs and the like will have to be relooked at in the context of a tax that will have a huge catastrophic effect,” Magubane said.
Phil Gutsche, chairman of Coca-Cola Beverages Africa, has said that South Africa could lose as many as 60,000 jobs in the beverage industry because of the proposed tax.
According to Reuters, the beverage sector employs approximately 200,000 people in a country where unemployment exceeds 26%.
The Beverage Association of South Africa said that many of those jobs on the line are amongst small spaza owners and vendors in the informal sector.
“Because it is an excise duty and not a sales tax, soft drink manufacturers may also have to increase the price of other drinks too – including healthier options such as bottled water and fruit juice to cross-subsidise losses or, in the case of smaller soft drink manufacturers to merely stay in business.”
“The regressive nature of this tax is that the poor simply pay more,” said BEVSA executive director, Mapule Ncanywa.