Sunday Tribune

Taxing sugar is a bitter sweet plan

- Leonard Willemse

THE 2016 Budget has confirmed what a number of people have expected – the future introducti­on of a sugar tax. The government has pointed out that obesity stemming from overconsum­ption of sugar is a global concern, leading to greater risk of heart disease, diabetes and cancer. Research by the University of Witwatersr­and found that a 20 percent tax on sweetened sugar beverages (SSBs) could possibly reduce obesity in 220 000 adults.

Fiscal interventi­ons such as taxes are increasing­ly recognised as complement­ary tools to help influence people’s lifestyles in respect of consumptio­n. In response hereto and also in line with what other countries such as Denmark, Finland, France, Ireland and Mexico are doing, it was proposed by Finance Minister Pravin Gordhan in his Budget speech that a tax on SSBs be introduced on April 1 next year to help reduce excessive sugar intake.

SSBs include still and carbonated soft drinks, fruit juices, sports drinks, energy drinks and vitamin waters, sweetened ice tea, lemonade, cordials and squashes.

One might compare the intended effect of this sugar tax to that of the excise duties levied on cigarettes and alcoholic beverages, which aim to promote healthier lifestyles and physical wellness. Although a noble idea from a health perspectiv­e, it remains to be seen however whether the addition of another so-called “stealth tax” (a tax that slips under the radar of the average consumer) will have a “healthy” impact on consumers’ pockets and physical wellbeing when one compares the effect of the sin taxes.

Sin tax

The consumptio­n of alcohol and cigarettes has not necessaril­y fallen drasticall­y as a result of an increase in sin taxes as such. According to a report[ by the World Health Organisati­on (WHO) South Africa consumed 11.0 litres of pure alcohol in 2010, tipping them as the African country that consumes the most alcohol per capita.

Sugar tax could have the same negligi- ble effect on consumptio­n of goods as the excise duties have on the consumptio­n of other “unhealthy” products. Simply put, those of us who love drinking sweetened beverages might continue to do so even though it might cost us more.

So in the end, consumers might still consume a considerab­le amount of sugar while negating the government’s “noble” intention, resulting in a bitter taste for the wallet. The government, however, will enjoy a sweet taste in the form of additional revenue. Should the converse apply, the government might well have a sweetand-sour taste in its mouth with achieving an improvemen­t in people’s health but losing out on additional revenue where the consumptio­n of SSB’s might fall.

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