“This feels like a victory for Britain’s children”
(celebrity chef Jamie Oliver commenting
on news that a sugary drinks levy will be
introduced in the UK in 2018).
Tax increases are on the way and Treasury
has signalled that a sugar tax (more correctly,
a “Health Promotion Levy”) will be levied
from 1 April 2018. As with all new taxes,
emotions have been running high.
Much of the debate centres on whether the
tax is simply a revenue-generating exercise
or whether it will bring medium to long term
health benefits to South Africa.
Recent tax increases have come mainly
from an increase in the personal income
tax rate and the fuel levy. Spreading the
tax net wider will help Treasury to raise
The tax will be levied at 2.1 cents per gram
of sugar content that exceeds 4 grams
per 100 ml.
The passing of the legislation follows
exhaustive negotiations, and public hearings
which included NEDLAC (National Economic
Development and Labour Council).
How will prices rise and what does
the sugar industry say?
The proposed tax is estimated to add up
to 11% to the cost of sweetened soft drinks
such as Coca-Cola. This is in contrast to the
initial proposal which was 20%, plus items
such as 100% pure fruit juice have now
The sugar industry, which opposed the levy,
has been under pressure since the turn of
the century and 20,000 jobs have been lost,
with the industry saying now that another
3,129 jobs will be under immediate threat
and 20,000 more in 5 to 7 years. There have
also been predictions that companies like
Coca-Cola will cut investment leading to
further job cuts.
What does the health industry say?
- A sugar tax is one of the cornerstones
of the Department of Health’s
determination to reduce noncommunicable
diseases (NCDs) such as
obesity, diabetes and heart disease.
- The Department sees a clear link
between NCDs and sugar consumption,
although this supposed correlation
is strongly disputed by opponents
of the levy.
- NCDs are the leading cause of death in
low to middle income countries.
- South Africa has the highest incidence of
obesity in Africa.
- We are among the top ten consumers of
soft drinks in the world.
- Diabetes alone killed 25,000 people
in 2015, whilst diabetes, strokes, heart
diseases and other obesity related
conditions cause 55% of deaths in
- India, Portugal, Saudi Arabia and
Thailand have introduced taxes to
combat NCDs in 2017. More than 30
countries have sugar tax legislation
- Key research in these countries is that
there were minimal job losses (Mexico)
and it reduced consumption of sugar
drinks by 10%.
Treasury forecasts an additional R1bn to
R1.5bn in annual revenue from the levy.
Licensing and registration of manufacturers
of sugary beverages will take place from
On balance the consensus seems to be
that a sugar-sweetened beverages tax will
bring in revenue to the fiscus (potentially
limiting income tax increases) and is likely
to have health benefits. Parliament is aware
of potential retrenchments and will be
monitoring the impact of the tax on the