Cedric Mboyisa, Priya Seetal and Dr Marilyn Govender

South African Sugar Association (SASA) Vice-Chairman Suresh Naidoo (right) and the Congress of South African Trade Unions (COSATU)  Parliamentary Coordinator Matthew Parks (left).

Parliament should accord the sugar industry and all other stakeholders sufficient time to consider the adverse implications of the Health Promotion Levy on Sugary Beverages, find alternatives and come up with proactive mitigation measures.

This call was made by the South African Sugar Association (SASA) Vice-Chairman Suresh Naidoo and the Congress of South African Trade Unions (COSATU) during their respective presentations to the National Assembly’s Standing Committee on Finance on 31 May. 

Parliament held public hearings on the levy so that pro and anti-levy proponents could state their case before the designated committee debates, discusses, deliberates on and finalises the matter. In February this year, National Treasury proposed the Sugar Sweetened Beverages (SSBs) tax to the National Assembly as part of the draft Rates and Monetary Amounts and Amendment of Revenues Bill.  The tax, now represented in the Bill as the Health Promotion Levy on Sugary Beverages, was open for public comment until 31 March.

“Meaningful engagement must take place between National Treasury and the sugar industry. At the proposed level of tax on SSBs the impact on the total energy intake is about 12 kcal/capita/day or 0.4% of energy intake. This explains why no evidence can be found that a single approach on one component of the diet has an impact on obesity or Non-Communicable Diseases of which the cause is multifactorial,” said Naidoo.

He added: “The structure of health promotion levy reduced the effective rate but leaves the marginal rate largely unchanged. The Minister of Finance can change in the future, the level of the health promotion levy. National Treasury has already stated on many occasions, that if obesity will not come down, the level of the tax will be increased. The future level of the levy or tax and thus eventual economic and job impact is thus unknown and can be severe over time.”

Members of Parliament during Naidoo’s presentation.

The Congress of South African Trade Unions (COSATU) also expressed its objection to the levy, arguing that it would result in job losses. “While supporting government’s health objectives, COSATU is deeply concerned about the likely impact of the SSBs tax upon jobs. Treasury estimates it will cause five thousand job losses. Treasury and the Department of Health’s silence on this fundamental matter indicate they view such losses of jobs for those families’ breadwinners as collateral damage,” said COSATU Parliamentary Coordinator Matthew Parks. Currently, the country’s unemployment rate is 35%.

Both SASA and COSATU appealed to Parliament to wait until the Nedlac SSBs Task Team has completed its work. “Before any measures in terms of taxation or levies on producers of food and drink, and associated commodities is implemented, government should consider the issues and recommendations raised by the sugar industry and going forward through Nedlac,” said Naidoo.