Earlier this year, at the 2022 National Budget Speech, National Treasury announced its intention to increase the health promotion levy (HPL), also known as the sugar tax from 2.21 to 2.31 cents per gram of sugar, after three years of no changes. This announcement was made against the backdrop of ongoing efforts by the Department of Trade, Industry and Competition (DTIC) and the Department of Agriculture to stabilize an already ailing industry. The current sugar industry challenges have been further compounded by the Covid-19 pandemic and the July 2021 unrest, which saw an interruption to sugar supply, which continues to persist more than a year later. National Treasury’s announcement regarding increasing the sugar tax will practically result in even more challenges for the sugar industry.
Despite all efforts, as industry, we have yet to see signs of stabilization in the sugar industry. Consequently, we believe that such proposals will have disastrous consequences on many fronts, further threatening the industry. One important aspect worth mentioning is that, according to latest figures, 25 000 jobs have been lost, to date, since the introduction of the HPL, which is a significant jump from the initial 16 900 lost in the first year of the HPL being deployed as mentioned in the NEDLAC Impact Assessment Report on the HPL. At this point, there is no clarity of whether the HPL did indeed achieve its health objectives as no impact assessment has been conducted by government to date.
Should the proposals put forward by National Treasury go ahead, i.e., extension of HPL to fruit juices and lowering of the 4-gram threshold, the livelihoods of many employed in the industry would hang in the balance. We would caution against any fiscal measures or policy changes on the HPL that do not fully take into account both public health interests and the socioeconomic effects as set out in the Socio-Economic Impact Assessment Systems (SEIAS) Guidelines of May 2015.
While the newly released Department of Health’s (DOH) National Strategic Plan on the Prevention and Control of Non-communicable Diseases 2020 – 2027 notes that sugar can play a part in poor diet, it also acknowledges that the causes of overweight, obesity and associated non-communicable diseases (NCDs) are highly complex and require a comprehensive mandate for multisectoral coordinating mechanisms, actions and accountability frameworks to develop and implement the policies necessary to prevent and control NCDs. The DOH’s National Strategic Plan on the Prevention and Control of NCDs puts less emphasis on fiscal interventions and tax policies on sugar-sweetened beverages (SSBs) as the only effective lever to fight NCDs. Instead, the plan outlines the national goals and strategic objectives that will guide all stakeholders in fighting NCDs in the country and these include:
- Prioritizing the prevention and control of NCDs.
- Promote and enable health and wellness across the life course through targeted health promotion and diseases prevention activities.
- Ensure people living with NCDs receive an integrated people-centered health activities to prevent and control NCDs; and
- Promote and support national capacity for high quality research and development for the prevention and control of NCDs.
It has always been our position that the Sugar Tax in its current form erroneously identifies SSBs as the primary source of added sugars in the diet of South Africans. The conclusion that SSBs are the only contributor to the diet of South Africans is one that is not substantiated/supported by any study that analyses the relationship between what is consumed and the contribution thereof to the prevalence of NCDs such as diabetes and conditions such as obesity. Perhaps this oversight is one that might be addressed by the DOH, which has commissioned the University of the Western Cape and other collaborating universities to conduct a national survey that will examine the dietary intake of South Africans among other things. This is an important undertaking which we hope can also be used to shape policy and contribute to the debate.
As industry, we firmly believe that proposals made by National Treasury should be informed and preceded by the findings of the study that is currently being conducted by the DoH to understand the food consumption patterns of South Africans. Secondly, we are of the view that any proposal or intervention that introduces an extra financial burden on business and consumers in a form of additional taxes or levies should be subjected to governments SEIAS to fully understand the net sum impact of such proposals on our South Africa’s economic recovery agenda and impact on jobs.
The Health Promotion Levy/Sugar Tax has already caused massive damage to the sugar industry. In his Budget speech in February 2022, Finance Minister Enoch Godongwana announced the decision to increase the Health Promotion Levy (sugar tax), this decision was taken in absence of any evidence to show that the tax has had a positive impact on health outcomes or obesity levels in South Africa.
Nozicelo Ngcobo is Chairperson of The Beverage Association of South Africa. DM
