The excessive obesity figures for South Africa makes the introduction of a sugar tax inevitable, although the aim of a 10% reduction in just a few years seems quite optimistic.
Current figures indicate that the country is now considered the most obese in sub-Saharan Africa. Over half of South Africa’s adults are overweight and obese: 42% of women and 13% of men.
National Treasury published its policy paper on the introduction of a 20% sugar tax on sugar sweetened beverages last week and has invited comment on the proposals.
It refers to a study which estimated that a 20% tax on sugary drinks can reduce obesity by 3.8% in adult males and 2.4% in females.
Several countries have in the past followed a similar route, for example Ireland introduced a tax on soft drinks in 1916 and abolished it in 1992. The UK has proposed the implementation of a sugar tax in 2018.
National Treasury admits to several challenges facing the implementation of such a tax, including administrative costs, job losses, tax evasion by producers and product switching by consumers.
Finland experienced tax evasion issues. Denmark experienced cross-border distortions with people shopping in countries which did not have a similar tax and abolished the tax in 2014.
The South African Heart and Stroke Foundation supports the tax. However, Gabriel Eksteen, health promotion officer at the foundation, warns that sugar is not the only cause of obesity; sugar tax is only one piece of the puzzle and cannot solve the problem on its own.
“In addition to our efforts in educating consumers, we need the food industry to provide healthier food options. Despite being aware of the health risks associated with high sugar consumption many food producers continue to saturate the market with cheap sugar-laden products.”
Policy is one way to persuade industry to move in this direction. Tobacco legislation and sin tax are good examples of how policy can create an enabling environment for the consumer.
Eksteen says tackling obesity needs a comprehensive approach that addresses food accessibility and affordability, consumer education, marketing guidelines and safe and accessible places to exercise.
“To meet the ambitious goal of reducing overweight and obesity by 10% by 2020, we need the right resources, buy-in from multiple sectors and political will to make this happen.”
Piet Nel, head of the South African Institute of Tax Professionals’ technical department, says it is aware that fiscal interventions such as taxes are increasingly used to change negative behavior.
Taxes are seen as “effective complementary tools” to help tackle the problem of negative impact associated with pollution, smoking, excessive alcohol consumption and also the obesity epidemic at a population level.
“The concern is what will happen if it becomes clear that the ambitious target of reducing obesity prevalence by 10% by 2020, set by the Department of Health, is not achieved?” Will the tax rate be increased or will the tax base be expanded, he asks.
According to the Treasury policy paper the market for soft drinks in South Africa more than doubled from 2 294 million litres in 1998 to 4 746 million litres in 2012.
The UK’s Institute for Fiscal Studies says in a briefing note, that UK households with children purchase on average around 50% more of their added sugar from carbonated and non-carbonated soft drinks, compared with households without children.
An earlier study on the diets of young children (ages 12 to 24 months) in urban South African communities found that carbonated drinks were one of the most consumed drinks among young children. The consumption of carbonated drinks was less than maize meal and brewed tea, but more than milk.
The Institute for Fiscal Studies says if everyone took into account all the costs, imposed both on themselves and on broader society, that were associated with their sugar consumption, there would be little reason for government intervention.
“The social cost from an obese person eating an additional chocolate bar are likely to be higher than those from a marathon runner,” it states.
Any tax is likely to affect not only the people for whom the actual costs are most out of line with the perceived costs, but also the people for whom there is no social or future private cost.
“When considering the merits of introducing a corrective tax, it is important to consider this trade-off, and not simply focus on a set of problematic individuals and ignore the impact on others.”
The institute also warns about people switching to other products that are also associated with poor health outcomes.
“If people switch to chocolate, then this might increase saturated fat consumption while reducing sugar consumption, leading to an ambiguous effect on overall diet quality,” the institute states.
The South African Heart Foundation says ‘free sugars’ and ‘added’ sugars’ are often used interchangeably, but do not mean the same thing. Added sugar excludes products like fruit juice where the sugar in fruit has not been added to another product.
The World Health Organisation has recommended that free sugar intake should not exceed 10% of total energy intake, and further suggests that lowering free sugar intake to less than 5% holds additional benefit, particularly to weight maintenance and tooth decay.
Eksteen says 5% sugar equates to 25 grams or five teaspoons of sugar in a 2 000 calorie diet. However children, smaller women and inactive people may have lower daily energy requirements than 2 000 kcal, and free sugar intake may need to be as low as three teaspoons per day.
“Various authorities and scientists have questioned whether this level is achievable. A soft drink contains eight teaspoons sugar, sugary breakfast cereal three teaspoons per portion, and sweetened yogurt two teaspoons per 100 ml.”
Eksteen says the UK’s Scientific Advisory Committee on Nutrition provides the most thorough investigation to date into sugar intake and health and also recommends a 5% limit.
“We need to be careful not to demonise all foods that contain sugar. Nutrient dense foods are foods that contain many beneficial nutrients like fibre, vitamins, minerals and phytochemicals,” he says.
Despite their sugar content fruits and dairy are “nutrient dense and cardio protective foods”. In contrast, sugary beverages and confectionery products often contribute little else than energy to the diet, often termed ‘nutrient poor or ‘empty calories’.
Treasury has recommended the exemption of 100% fruit juice and unsweetened milk and milk products from the tax on sugar sweetened beverages.
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