Sugar Tax Will Reduce South Africa’s GDP By R14 Billion

According to the Beverages Association of South Africa (BevSA), a sugar tax would have serious negative implications for the country

A sugar tax will not only have a direct negative impact on jobs, but it is also expected to cripple the country’s economy.

According to BevSA, a sugar tax would reduce the GDP by R14 billion.

“Government revenues from its existing taxes could fall by at least R3.1 billion per annum, representing more than 40% of the revenue the Government hopes to raise through the SSB tax. The tax would, through its impact on unemployment, result in increased UIF payments of approximately R0.7 billion,” BevSA says a statement.

The association also believes that a sugar tax would have serious negative consequences for smaller businesses.

“As the proposed tax is levied per gram of sugar, smaller players who compete with lower prices and larger pack sizes will be most severely impacted. The SSBs (sugar-sweetened beverages) tax would represent a higher mark-up on their relative prices. Price increases could be as high as 80% on some 2 litre packages,” the association says. 

On Friday, Coca-Cola Beverages Africa (CCBA) said it would be left with no choice but to close its South African plants if a sugar tax was implemented in the country, leading to thousands of jobs being lost, Fin24 reported.

“If the tax goes ahead, CCBA would struggle to keep to an agreement with the government to keep employee levels steady for three years,” CCBA Managing Director Velaphi Ratshefola was quoted as saying in the report.

The announcement of a sugar tax levy for South Africa was announced by Finance Minister Pravin Gordhan during his budget speech earlier this year, the stated aim of the proposed sugar tax being to reduce obesity.

“Obesity is a global epidemic and a major risk factor for the growing burden of non-communicable diseases (NCDs) including heart diseases, diabetes and some cancers. The problem of obesity has grown over the past 30 years in South Africa resulting in the country being ranked the most obese country in sub-Saharan Africa. Fiscal interventions such as taxes are increasingly recognised as effective complementary tools to help tackle the problem of negative externalities associated with pollution, smoking, excessive alcohol consumption and also the obesity epidemic at a population level,” said a statement from the National Treasury in July.

Source: Destinyman


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