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26 June 2017 19:21 (South Africa)
Opinionista Ivo Vegter

Sugar tax: Attacking funding is not a counter-argument

  • Ivo Vegter
    Ivo Vegter

    Ivo Vegter is a columnist and the author of Extreme Environment, a book on environmental exaggeration and how it harms emerging economies. He writes on this and many other matters, from the perspective of individual liberty and free markets. He is seldom wrong.

Fin24 recently claimed to have “exposed” private funding for a research paper by the Institute for Race Relations on the government’s proposed sugar tax, notably from Coca-Cola. It also implicated me, although not by name.

In dramatic words and bold capital letters, Fin24’s Adiel Ismail recently revealed that Coca-Cola provided funding for a research paper by the Institute for Race Relations (IRR), about the likely effects of the government’s tax on sugar-sweetened beverages.

The reason Fin24 can reveal this is that all it took was a phone call to the IRR’s CEO Frans Cronjé, who promptly provided the “exposed” information. Although the question was almost certainly prompted by the pro-sugar tax lobby, it was hardly a big secret. Despite being entirely forthcoming, the Fin24 article essentially dismissed the IRR’s report, implying that the source of funding may have influenced the outcome of the research. This is an attack on the IRR’s integrity and credibility that is not supported by any actual evidence.

The story notes that Coca-Cola is the only brand mentioned in the IRR paper, without mentioning the stated reason why: a simple calculation from the proposed tax rate per gram of sugar shows that it is benchmarked to Coca-Cola, which would increase in price by exactly 20%, unlike any other sugar-sweetened beverage. Since the tax proposal is based on the sugar content of Coca-Cola, it makes sense to analyse the proposal in exactly those terms.

The article goes on to state unsupported platitudes about the importance of preventing non-communicable diseases like obesity and diabetes, and uncritically repeats claims made in the study on which the government’s tax proposal was based.

The IRR wrote a strongly-worded response, accusing Fin24 of failing to engage with the substance of the report, in favour of a smear campaign.

The Fin24 article also implicated me, although not by name:

“The IRR policy paper further casts doubt on the Manyema paper through citing the arguments of a columnist that appeared in a respected publication. However, on closer inspection it appears the columnist was commissioned by the IRR.”

Their “closer inspection” may have discovered the prominent disclosure at the end of each of my most recent two columns on the sugar tax, stating that they were based on research commissioned by the IRR, but they failed to discover the very next statement, which is that I was commissioned only after my first column on the subject appeared. The IRR commissioned me on 4 August 2016, more than three weeks after I took a public position in my first column on the sugar tax in Daily Maverick on 12 July 2016. I did not reach a position because they commissioned me. They commissioned me because of my position.

The IRR’s request to me was that I conduct further research to substantiate and elaborate on the views I had already expressed. Its head of policy research, Anthea Jeffery, would then draw on my research, among other sources, for her paper.

At no time was I instructed what to write, nor did I have any contact whatsoever with the funder. Having worked for the IRR before, writing policy articles for a former IRR division called Good Governance Africa, and a research paper on indoor air quality, I was – and remain – satisfied with the integrity of the organisation and its research. I was just as insulated from the interests of any private funders as I am insulated from Daily Maverick’s advertisers by its publisher.

Of course, like most journalists, the Fin24 reporter’s own pay cheque is funded in large part by private advertisers. Even more revealing is that Rachel Jafta, the chairperson of Fin24’s parent company Media24, is herself not only a member of the IRR, but also the founder of Econex, a consulting firm that provides services to large clients in South Africa.

Econex also published a research paper, in which it concludes much the same as the IRR did, namely that “the statistical evidence in Manyema et al. does not support the argument that a sugar tax will  reduce obesity,” and that such a tax “is unlikely to achieve its goals”. (Manyema et al. refers to the academic paper on which the government based its sugar tax proposal, and which came under fire in the IRR paper.)

The clincher is that the Econex paper was commissioned by the Beverage Association of South Africa, of which Coca-Cola is a founding member. Like the IRR paper, the Econex paper itself did not disclose this relationship. Why Fin24’s journalist did not make a scandal out of the exact same scenario involving a consultancy run by the media house’s chairperson is left as an exercise for the reader.

Personally, I think both Econex and the IRR made a mistake not to publish a prominent disclaimer about funding sources. However, since both freely admitted the identity of the funders upon request, I believe the error to be one of naïve oversight rather than malicious conspiracy.

The supposed scandal about private research funding has deeper implications, however. In any free democracy, research is for the most part paid from three sources: foreign or domestic government funding, corporate funding, and NGO funding. NGOs are mostly funded privately and they all have stated agendas. Companies, needless to say, follow their own special interests in choosing which research work to fund and publish. The incorrect presumption, however, is that government-funded research – including academic papers – are somehow immune to bias, whether by funding or ideology. This is not true.

The Manyema paper on which the government’s proposal is based states its bias explicitly:

“The aim of this study is to model the effect of a 20% [sugar-sweetened beverage] tax on the prevalence of obesity in [South African] adults. It will provide evidence on the potential impact of fiscal policy on [sugar-sweetened beverage] consumption and obesity in SA and enable the [Department of Health] to consider this as a lever to prevent and reduce the burden of disease resulting from obesity-related [non-communicable diseases].”

If that evidence turns out to be questionable, that would seem to be very relevant for both the public debate and policy formulation. This is why private funding of independent research establishes a crucial voice about matters of critical national importance. They reflect the interests not only of corporate boards, but also of entire industries, their employees, and the economy in general. If we only ever heard government-funded voices, we can be sure that every voice would say, “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it.”

Ever sensitive to scandal, I expect Fin24’s approach to this story will cause private funders to become reluctant to fund independent research. Instead, they will withdraw from the public sphere, conduct their research behind closed doors for their own consumption, and lobby ministers and members of parliament directly instead of publishing their research for open review. This will lead to less information available to the public and less transparency about corporate influence on government policy. It will lead to the exact opposite of what a newspaper like Fin24 is supposed to achieve.

Journalists should, by all means, mention private funding as a potential source of bias. I mentioned before that I think research firms should freely disclose it, as Cronjé did when he was asked. However, the media would best serve its readers by critically engaging with the arguments of both sides in a public debate, instead of blindly siding with the pro-government lobby – which is itself driven by special interests such as advocates of low-carb diets or sellers of artificial sweeteners.

As it stands, Fin24 has not challenged the arguments made against a sugar tax in the IRR paper, nor, for that matter, did it critically engage with the arguments made in favour of such a tax. I am confident that some arithmetic and elementary economics will lead it to the much the same conclusion that I reached in my own research and columns, that the IRR reached in its paper, and that Econex reached separately: a sugar tax will at best make only a marginal difference to a relatively small number of consumers, while depressing employment and economic activity throughout the value chain from sugar farmers to soft drinks producers to large and small retailers.

Attacking private funding of independent research is not a counter-argument. To use an old phrase describing the sensationalist tabloid press, it sheds more heat than light on a subject. It will serve the public far better if journalists evaluated both private and public research papers on their own merits, instead of simply dismissing privately-funded work and kow-towing to the government on public policy questions. DM

  • Ivo Vegter
    Ivo Vegter

    Ivo Vegter is a columnist and the author of Extreme Environment, a book on environmental exaggeration and how it harms emerging economies. He writes on this and many other matters, from the perspective of individual liberty and free markets. He is seldom wrong.

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