“The proposed sugar tax will do almost nothing to improve the health of South Africans‚” the Institute of Race Relations (IRR) said on Wednesday.
Instead‚ the think-tank said‚ a duty on sugar-sweetened beverages (SSB) is “an attempt to raise more money by a desperate government that is running short of revenue”.
The tax was announced in Finance Minister Pravin Gordhan’s Budget Speech in February‚ and it has been reported that Treasury estimates it could add about R11-billion to the fiscus.
The IRR said its research produced a similar figure: “Based on 2015 sales figures for the SSBs likely to be subjected to the tax‚ the yield from the new tax could well be R10.5-billion and perhaps even more.
“This is roughly half the R20-billion in additional revenue that a one percentage point increase in the VAT rate (from 14% to 15%) would bring in‚” the IRR added.
“…Similar taxes on other sugary foods‚ as well as on other products seen as contributing to obesity‚ such as ‘fast foods’ and those high in salt” could‚ the IRR argued‚ “bring in the full R20bn that could be generated by increasing the VAT rate to 15% – but without the government having to confront the public outcry that an overt VAT increase would spark”.
“That sugar taxes yield useful amounts of revenue is also why governments prefer them to initiatives known to work far better against obesity‚” it said.
The National Department of Health (NDoH)‚ however‚ last month said it believes that “taxes are an excellent mediator of consumer behaviour”.
In a statement outlining the department’s position on the proposed tax on SSBs‚ it noted that it was Treasury‚ not it‚ that had made the decision “as part of their 2016 budget process”.
It was‚ nonetheless‚ deemed a “best buy in the Strategic Plan for the Prevention and Control of Non-Communicable Diseases 2013-17 as well as in the Strategy for the Prevention and Control of Obesity 2015-2020” of the NDoH.
To support its stance‚ it quoted “research done by PRICELESS at the University of the Witwatersrand [which] suggests that a 20% SSB tax could lead to a reduction by 3.8% in men and 2.4% in women or a decrease in obese people by 220 000 – mostly in the first three years”.
The Democratic Alliance said last month that it would reject the proposed sugar tax if its purpose is “simply to raise more revenue under the fig leaf of a public health benefit”.
The party’s Dr Wilmot James said a “meaningful portion of this revenue should be ring-fenced for medical research”‚ and posited that “if the tax is clearly structured to fund medical research on obesity‚ diabetes‚ hypertension and social habits that result in an increase in body mass index (BMI)‚ its purpose would be more defensible”.
Read the IRR’s policy on the sugar tax here: https://gallery.mailchimp.com/04538ad94a3f2c8b94ac28aec/files/IRR–Policy–Paper–A–stealth–tax–not–a–health–tax.pdf
– TMG Digital
Sugar tax is about revenue not health: IRR
“The proposed sugar tax will do almost nothing to improve the health of South Africans‚” the Institute of Race Relations (IRR) said on Wednesday.
Instead‚ the think-tank said‚ a duty on sugar-sweetened beverages (SSB) is “an attempt to raise more money by a desperate government that is running short of revenue”.
The tax was announced in Finance Minister Pravin Gordhan’s Budget Speech in February‚ and it has been reported that Treasury estimates it could add about R11-billion to the fiscus.
The IRR said its research produced a similar figure: “Based on 2015 sales figures for the SSBs likely to be subjected to the tax‚ the yield from the new tax could well be R10.5-billion and perhaps even more.
“This is roughly half the R20-billion in additional revenue that a one percentage point increase in the VAT rate (from 14% to 15%) would bring in‚” the IRR added.
“…Similar taxes on other sugary foods‚ as well as on other products seen as contributing to obesity‚ such as ‘fast foods’ and those high in salt” could‚ the IRR argued‚ “bring in the full R20bn that could be generated by increasing the VAT rate to 15% – but without the government having to confront the public outcry that an overt VAT increase would spark”.
“That sugar taxes yield useful amounts of revenue is also why governments prefer them to initiatives known to work far better against obesity‚” it said.
The National Department of Health (NDoH)‚ however‚ last month said it believes that “taxes are an excellent mediator of consumer behaviour”.
In a statement outlining the department’s position on the proposed tax on SSBs‚ it noted that it was Treasury‚ not it‚ that had made the decision “as part of their 2016 budget process”.
It was‚ nonetheless‚ deemed a “best buy in the Strategic Plan for the Prevention and Control of Non-Communicable Diseases 2013-17 as well as in the Strategy for the Prevention and Control of Obesity 2015-2020” of the NDoH.
To support its stance‚ it quoted “research done by PRICELESS at the University of the Witwatersrand [which] suggests that a 20% SSB tax could lead to a reduction by 3.8% in men and 2.4% in women or a decrease in obese people by 220 000 – mostly in the first three years”.
The Democratic Alliance said last month that it would reject the proposed sugar tax if its purpose is “simply to raise more revenue under the fig leaf of a public health benefit”.
The party’s Dr Wilmot James said a “meaningful portion of this revenue should be ring-fenced for medical research”‚ and posited that “if the tax is clearly structured to fund medical research on obesity‚ diabetes‚ hypertension and social habits that result in an increase in body mass index (BMI)‚ its purpose would be more defensible”.
Read the IRR’s policy on the sugar tax here: https://gallery.mailchimp.com/04538ad94a3f2c8b94ac28aec/files/IRR–Policy–Paper–A–stealth–tax–not–a–health–tax.pdf
– TMG Digital
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