BevSA welcomes KPMG sugar report

23rd June 2016

By: Anine Kilian

Contributing Editor Online

  

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The Beverage Association of South Africa (BevSA) has welcomed a report by accounting and auditing firm KPMG calling for a socioeconomic impact assessment (SEIAS) of the sugar tax proposed by National Treasury.
 
In the report, titled ‘Taxing your sweet tooth – Effective nudge or economic burden?’, KPMG  strongly recommended that an investigation be conducted into how consumers would respond to a tax on sugar-sweetened beverages in terms of behavioural change.
 
BevSA supported the call for an SEIAS on the proposed sugar tax, which National Treasury wanted to implement from April 2017.
 
The proposed sugar tax would have a number of implications for the beverage industry, as well as for consumers and the national fiscus, which BevSA felt needed to be fully understood before any tax was introduced to ensure that there were no unintended negative consequences.
 
BevSA said it was committed to partnering with government to meet its target of reducing obesity prevalence in South Africa by 10% by 2020, as outlined in the Department of Health’s (DoH’s) National Strategy for the Prevention and Control of Obesity 2015-2020. 
 
BevSA believed, however, that the targeting of a single product with a tax would not help the government meet its objectives and that the sugar tax was discriminatory and would have a disproportionate effect on lower-income earners who spent a greater portion of their budget on food.
 
There was also a growing body of evidence showing that a tax on sugar-sweetened beverages did not reduce calorie intake.

Further, according to the report, with the intended effect of the tax on sugar-sweetened beverages being to reduce consumption, a reduction of the demand for labour along the value chain could result.

South Africa was expected to harvest the least amount of sugar in the 2015/16 season since 1995 – 22% less than in the previous year.

The sugar industry currently employed 79 000 people directly and 350 000 people indirectly, all of whom could be subject to wage reductions or dismissal if the sugar tax had a negative effect on profitability.
 
KPMG pointed out in the report that if the tax was implemented without similar taxes being introduced by South Africa’s neighbours, it was likely to lead to an increase in illegal trade in beverages as it became more attractive to purchase the beverages from these bordering countries.
 
If this happened, the tax would not succeed in its revenue collection ambitions or change consumer behaviour.

BevSA was working with the DoH to find the best possible solution to help tackle obesity and the impact it had on the nation’s health.

The report suggested an investigation of alternative options for achieving the desired
policy outcomes.

It noted that various recent breakthroughs in behavioral science could assist policy makers and other stakeholders to nudge consumers towards healthier lifestyle choices, for their benefit as well as society’s.


 

Edited by Samantha Herbst
Creamer Media Deputy Editor

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