South African Institute of Race Relations (IRR) chief operating officer Gwen Ngwenya responds to a story published on Fin24 on Wednesday, in which it revealed that Coca-Cola funded IRR research on taxing sugar-sweetened beverages (SSBs):
Fin24 has chosen not to engage with the evidence mustered or the arguments raised by the IRR, but rather to engage in a smear campaign to deflect attention from the IRR's analysis on the grounds that private sector companies invest in the IRR and enable some of its research. Of course the private sector finances some of our research. It was private-sector investment that allowed the IRR to survive in the darkest days of apartheid. We actively seek funding from companies likely to be negatively affected by adverse policy proposals which we believe will also be bad for jobs, bad for investment, and bad for the poor, but we approach such investors strictly on the basis that the IRR maintains complete editorial control over the research we conduct and the conclusions we reach. The Fin24 ‘exposé’ embarrassingly exposes nothing at all, but concedes that it was the IRR that approached companies for funding and not the reverse.
What Fin24 has engaged in here is actually very dangerous. Rather than dealing with the merits of the argument – but, instead, actually deflecting attention from it – aspersions are cast and given prominence. There is a growing trend of the government attacking the media and, by extension, freedom of speech, based on the ownership and financing structures of media houses.
Fin24 is part of the Media24 stable of publications which is itself a private sector media house. So what point are Fin24’s journalists making when they cast aspersions on private-sector supported research? Media24 and its various publications is often singled out for such criticism on the grounds that it is a private sector media house – yet its own journalists are now doing exactly the same thing. What will Media24's defence be the next time a senior government official responds to a critical story by alleging that its journalists and editors are in the pay of the private sector and therefore hell bent on undermining the government and the ruling party? The defence of its editorial policy and the independence of its editors and journalists has been rendered meaningless by what its own journalists have written. Fin24 has undermined the media’s own argument; that impartiality is possible while receiving private funding.
The same attacks are being launched on civil society groups - especially when they carry a message that is unpopular with the ruling party. Most recently, attacks were levelled at the former public protector and the validity of her report on state capture on the grounds of such funding. It is one of the greatest threats to civil society groups in our country and, given the intertwined futures of the free press and an independent civil society, journalists should not be reinforcing the threat.
If Fin24 disagrees with our conclusions on the sugar tax, it should deal with the merits of the case we have made, not seek to discredit those findings by casting aspersions. To take this point a step further, we challenge Fin24 to counter all the arguments raised in our policy paper on the proposed SSB tax, titled A Stealth Tax, Not a Health Tax - not through a 900-word opinion piece plagiarised from other news publications and authors, but an original in-depth Fin24-authored analysis of what is an extremely complex policy subject, and which our expert analysts will look to counter. If Fin24 cannot produce such an analysis, then on what grounds is it effectively endorsing the tax while feeding its readers gossip and aspersions?
As a classically liberal think-tank, the IRR is opposed to increasing the tax burden on a struggling economy and, in particular, to doing so through secondary or indirect taxes that weigh most heavily on the poor. It is also opposed to counter-productive government interference in markets, whether through pricing mechanisms or through other dirigiste interventions. Simply put, we think the role of the state is to create an enabling environment for investment-led economic growth.
Having looked at international experience with sugar taxes, IRR analysts concluded that South Africa’s proposed tax on sugar-sweetened beverages (SSBs) will be ineffective in combating obesity. There are also many more useful interventions that could be made to counter this complex problem – and which the government could (and should) embrace. That it persists in focusing on the SSB tax instead strengthens our belief that the tax is essentially an underhand attempt to dodge the political bullet that would come from increasing the VAT rate by one percentage point. The proposed tax is a disguised VAT increase - a fiscal mechanism to expand the diminishing tax take, not a health intervention to overcome obesity.
Sugar taxes are one of the least effective interventions against obesity. Such taxes are nevertheless given far more media attention than other more useful measures. This seems to reflect a growing hostility towards the private sector within the media, both here and abroad. Governments naturally like sugar taxes too because they raise useful amounts of revenue. However, such taxes do very little to counter obesity. Worse still, they damage the poor while distracting attention from the need for much more effective interventions against an intensifying and extremely complex problem.