Sugar tax will be minimal

2017-02-02 06:02

Although the overall impact of a tax on sugar-sweetened beverages would be negative the effect would be “relatively small”, National Treasury said.

During public hearings on government’s proposed tax that took place in Parliament on Tuesday. Treasury said it expected job losses in the sugar and beverages industries to be 5 000 at most.

National Treasury’s initial analysis, which was based on the multiplier and computable general equilibrium (CGE) models to highlight the effect on overall output in the economy, showed that the net impact of 2.29c/gram sugar would result in a decline in volumes of between 13% and 15% of sugary beverages.

Treasury said by taking the substitution effect between carbonates and low-calorie carbonates into account, the formal sector will experience a decline of about 286 million litres, which in turn will lead to a decline in revenue of about R1.4bn per year.

The public hearings on a proposed tax on sugar-sweetened beverages (SSB) were characterised by two distinct groupings – health experts and civil society organisations in favour of such a tax on the one hand and stakeholders in the sugar and beverages industry on the other hand, claiming that jobs and the economic viability of the industry would be seriously jeopardised.

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