‘Taxes an excellent mediator of consumer behaviour’: Health department on sugar tax

The National Department of Health (NDoH) believes that “taxes are an excellent mediator of consumer behaviour”.

In a statement outlining the department’s position on the proposed tax on sugar sweetened beverages (SSB)‚ it noted that it was Treasury‚ not it‚ that had made the decision “as part of their 2016 budget process”.

It was‚ nonetheless‚ deemed a “best buy in the Strategic Plan for the Prevention and Control of Non-Communicable Diseases 2013-17 as well as in the Strategy for the Prevention and Control of Obesity 2015-2020” of the NDoH.

To support its stance‚ it quoted “research done by PRICELESS at the University of the Witwatersrand [which] suggests that a 20% SSB tax could lead to a reduction by 3.8% in men and 2.4% in women or a decrease in obese people by 220 000 – mostly in the first three years”.

“On the other hand‚ without a tax‚ soft drinks are projected to grow by 2.4% per year‚ predominantly amongst poorer people and this could lead to a 16% increase in obesity by 2017 or which 20% would be due to SSBs‚” it said.

Conceding that the department had “not done specific calculations on costs to the economy‚ we have noted the global World Health Organisation estimates that high BMIs (body mass index) drive between 2% and 7% of global healthcare spending with up to 20% of all healthcare spending attributable to obesity‚ through related diseases such as type 2 diabetes and heart disease”.

“We do not have figures for the impacts of obesity on the economy as a whole‚ but these would be substantial in terms of absenteeism due to obesity related illness and attendance at health facilities‚ lethargy at work and other impacts‚” the NDoH said.

On Tuesday‚ the Democratic Alliance (DA) said it would reject Finance Minister Pravin Gorghan’s proposed sugar tax if its purpose is “simply to raise more revenue under the fig leaf of a public health benefit”.

The party’s Dr Wilmot James said that it had “made submissions on the proposed Taxation of Sugar-Sweetened Beverages (SSBs)‚ which was gazetted by National Treasury for public feedback on July 8”.

The proposal was announced in Gordhan’s budget speech in February‚ and “Treasury estimates that the sugar tax could add about R11-billion to the fiscus”.

James said a “meaningful portion of this revenue should be ring-fenced for medical research”‚ and posited that “if the tax is clearly structured to fund medical research on obesity‚ diabetes‚ hypertension and social habits that result in an increase in body mass index (BMI)‚ its purpose would be more defensible”.

The party’s concern‚ he said‚ was job losses as a result of the tax and that it “could pose a threat to the survival of small businesses and spaza shops‚ as revenue from sweetened drinks represents a large percentage of their revenue”.

James said that rather than seeing the “beverage industry as an enemy of change”‚ the sugar tax should be “structured to encourage product innovation”.

“This would entail a graduated tax on manufacturers that would prompt companies to innovate and develop their product range to include drinks that fall under a proposed sugar threshold that attract no additional taxes‚” he explained.

“Consideration should also be given to direct tax proceeds towards assisting schools to promote exercise and expanding the range of nutritious food and drink offerings at tuck shops.”

One thought on “‘Taxes an excellent mediator of consumer behaviour’: Health department on sugar tax

  • August 24, 2016 at 7:53 am

    do they really believe that this will stop people from becoming obese? Its simply another means for the government to milk the man in the street


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