29 Feb 2016 Reaction to SA’s proposed sugar tax: Sweet idea or not?

Sugar Tax: not a sweet idea!

I can walk my dogs through a field full of mielies and they won’t pinch even one. That’s because dogs did not evolve to process carbohydrates and sugars. Humans are the same. Otherwise we would have a few stomachs and wouldn’t have hunted mammoths. Humans are not grazers.

But humans are clever and we learned how to grow, process, refine and market carbohydrates and sugars. Populations exploded because we all got hooked on the wrong stuff.

However, it is going to take a lot to convince me of the wisdom in the announcement in the national budget speech that sugar tax will be imposed next year.

Many are very concerned at SA’s sugar habits. But please don’t limit the argument to sugar. Refined carbohydrates are doing just as much damage.

So will a sugar tax change SA’s consumer behavior? Not a chance in hell! A tax that competes with supermarkets placing everything that is sugar next to the tills so kids will shred their parents legs if they don’t get a fix? Don’t make me laugh!  The tax will only further impoverish parents.

If retailers were really buying into 3PL (people, planet and profit) they would put the sweeties and cool drinks at a separate counter, like the cigarettes and booze.

Virtually the only sugar free option for the poor will be canned pilchards and that price has gone bonkers.

So if sugar is to be subject to a broad-based tax it will hit nearly everything on which the poor exist.

If sugar tax is selective and only imposed on sweets, cool drinks etc there will be huge inconsistencies in the law and its application.

The banting diet proposed by Prof Tim Noakes and others more than doubles the food bill. Banting is a pastime for the rich?

Perhaps national treasury is looking at sugar tax and tyre tax because carbon tax has been delayed again so other forms of tax are needed to supplement VAT collections.

So what is the alternative?

Economists generally agree that a VAT increase would cause less strain on the economy than a personal or corporate tax increase. But they also agree that a VAT increase would have a greater adverse impact on inequality. So the VAT rate remains unchanged until we can find a way of more than compensating the poor for a VAT rate increase.

Zero rating of basic foodstuff, currently costing SA around R20 billion per annum, is a blunt instrument where the rich benefit just as much as the poor. That’s not going to do it.

We need a VAT CODESA. Lock all the players in a room, leaving their egos at the door. And they have got to sit there until they can agree a way of increasing VAT with a targeted compensatory package where the poor are better off.

See Matthew Lester’s blog here: http://criticalthought.co.za/sugar-tax-not-a-sweet-idea/

South Africa: Sugar Tax Gets Sweet Support in News24 Poll

The announcement of South Africa introducing a tax on sugar-sweetened beverages has garnered significant support, according to a snap vote on News24.

Finance Minister Pravin Gordhan took South Africans by surprise when he announced the introduction of a tax on sugar-sweetened beverages (SSBs) in his budget speech.

SSBs includes still and carbonated soft drinks, fruit juices, sports drinks, energy drinks and vitamin waters, sweetened ice tea, lemonade, cordials and squashes.

In South Africa, there has been a call for a sugar tax of 20%, following research by the University of Witwatersrand suggesting that a tax on SSBs may reduce obesity in 220 000 adults.

A poll on News24 indicated that 47% (11 992) readers who participated in the vote were in support of a sugar tax. 28% (7 012) readers were not in favour of it, while 25% (6 492) didn’t care.

Health Minister Aaron Motsoaledi’s spokesperson, Joe Maila, told Health24 that a sugar tax is one of the measures that can assist the department in its bid to help reduce the burden of non-communicable diseases on the country……

News24.com: Read the full article

Sugar taxes… A briefing from the IEA (Institute of Economic Affairs)

Taxing food and soft drinks in the name of obesity is not a new idea. Dozens of jurisdictions have experimented with such taxes over the years, allowing economists to study their impact. The results have consistently showed the following:

• Demand for sugary drinks, snacks and fatty foods is inelastic. People tend to be quite unresponsive to price hikes and do not significantly change their shopping habits.

• Consumers respond by switching to cheaper brands of the product or shopping in cheaper shops. This leads to the consumption of inferior goods rather than the consumption of fewer calories.

• Consumers respond by switching to cheaper brands of the product or shopping in cheaper shops. This leads to the consumption of inf erior goods rather than the consumption of fewer calories.

• Taxes on sugary drinks lead consumers to switch to other high calorie drinks such as fruit juice, milk or alcohol.

• Taxes on energy – dense food and soft drinks take a greater share of income from the poor than the rich. This regressive effect is exacerbated by low income consumers being less responsive to price changes than the rich.

• No impact on obesity or health outcomes has ever been found

IEA: Read more here

A tax on sugar won’t work, as the shipwreck of the Danish ‘fat tax’ shows

Bad ideas die hard in the world of ‘public health’, especially when the government can make money out of them. The shipwreck of Denmark’s notorious ‘fat tax’ should have served as a lighthouse for politicians for a generation.

The Spectator: Read more here