Why a sugar tax on beverages won’t tackle obesity in South Africa

A tax on sugar-sweetened beverages (SSBs), as proposed by National Treasury, may be a cost effective way for government to raise additional revenues, but it will have little or no impact on tackling obesity in South Africa.

This is according to Mapule Ncanywa, the executive director of the Beverage Association of South Africa.

Ncanywa noted that Dr. Sundeep Ruder, a Johannesburg-based endocrinologist, claims that research shows that there could be 250,000 fewer obese South Africans in three to five years if the SSB tax is introduced.

“The science is flawed, however, as there are many contributing factors to obesity – a lifestyle disease that is the result of consuming too many kilojoules and exercising too little,” Ncanywa said.

The BEVSA pointed out that sugar-sweetened  beverages contribute just 3% of the total kilojoules consumed by the average South African on a daily basis. “So even if the tax did reduce consumption of sugary drinks – and there is little global evidence to show this – it would have a negligible impact on the total kilojoule intake of consumers,” Ncanywa said.

The BEVSA argued that a tax on SSBs assumes that people will consume less sugary drinks if they become more expensive – but experience in both developed and developing countries shows otherwise.

While consumption of sugar-sweetened beverages decreases following the addition of a tax, it soon seems to start climbing again. “Take Mexico for example, where firms reported that sales volumes – an accurate proxy for sodas consumed – are now the same as before a sugar tax was introduced or growing. Denmark scrapped its long-standing sugar tax in 2014 because it had very little impact on public health,” Ncanywa said.

A 2014 study commissioned by the European Union reported that while food taxes reduced consumption of the taxed products, consumers simply switched to cheaper and even less healthy alternatives.  One likely potential consequence of an SSB tax is that price sensitive consumers will simply switch to other sugary products such as confectionery and biscuits – which currently aren’t targeted under the proposed tax, the association argued.

It said that one of the most authoritative reports on tackling obesity in recent years comes from the McKinsey Global Institute’s 2014 study. It found that of all the possible options available to combat the lifestyle disease, the most effective by far were portion size and reformulation of products to reduce sugar content.

The BEVSA said that while Dr. Ruder compares the proposed tax on sugary drinks to that of the recent legislation on regulating the salt content in food, they are entirely different policy approaches.

A standalone tax on soda, will have little health benefits and is merely a money spinner for government.  The economic and social consequences of this headline-grabbing tax, however, should be scrutinized – some 60,000 jobs are on the line, many of those are amongst small spaza owners and vendors in the informal sector, the association argued.

“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,” Ncanywa said.

“There’s no doubt that SSBs are a soft target when the tax coffers need some plumping, but a tax on sugary drinks won’t improve the nation’s health,” Ncanywa said.

More on the sugar tax

There’s a simple alternative to a sugar tax to fight obesity

Are all sugars bad for you?

The sugary drinks that will be taxed in South Africa

Sugar tax confirmed for South Africa in 2017