SA proposes 20% tax on sugary drinks

Delighting health campaigners but dismaying the beverage industry.

South Africa’s Treasury said on Friday it was proposing a 20% tax on sugary drinks, under a plan that has delighted health campaigners but dismayed the beverage industry.

The statement gave the first concrete details of a tax first suggested by Finance Minister Pravin Gordhan in February – which the Beverage Association of South Africa has already dismissed as “discriminatory” and bound to fail.

“The proposed tax … comes against the backdrop of a growing global concern regarding obesity stemming from over-consumption of sugar,” the Treasury said on its website.

It asked people to send in comments on the proposal by Aug. 22.

More than half of South Africa’s adults are overweight, with 42%  of women and 13% of men obese, according to Treasury data. Sub-Sahara’s most industrialised economy also has its most overweight population, the figures show.

The Beverage Association of South Africa (BevSA), whose members include Coca Cola Co, Pepsi Inc and SABMiller, met Treasury officials about the tax in April.

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A few years ago Hungary introduced similar tax on sugary drinks and some junk foods, popularly called “chips tax”. Initially the consumption dropped but within a few months it was up at the previous level, people just took it as if it was inflation. Interestingly this tax effected some fruit juices also because they have high sugar content too. The other anomaly is that the price of the coke zero increased the same percentage as the regular one.

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