South Africa’s proposal to tax sugar sweetened beverages which was first announced in 2016 finally came into effect on Sunday 1st April 2018.
The new sugar tax called the ‘Sugary Beverages Levy” and a part of the “Health Promotion Levy” is set at 2.1 cents per gram of sugar content that exceeds 4g per 100ml. According to the new law, the first 4g per 100ml are levy free.
“Sugar” refers to intrinsic and added sugar and other sweetening matter. However, fruit juice is exempt.
The South African Revenue Service (SARS) said that “Manufacturers that produce sugary beverages with a total annual sugar content in excess of 500 kg per year need to be licensed with SARS and pay the levy to SARS. Those manufacturers that produce below the 500kg per year will not have to pay the levy, but they are required to register with SARS,” says the service.
Coca-Cola South Africa said that the sugary tax will lead to price increases of some of its products with the exception of its lower-sugar, zero sugar and 100% juices.
“As part of the beverage industry, Coca-Cola in South Africa remains committed to working with Labour and Government through the National Economic Development and Labour Council (NEDLAC) to develop an effective anti-obesity solution that will preserve jobs while still meeting the country’s health objectives,” the company said.
“The Coca-Cola Company supports current recommendations of leading health authorities, including the World Health Organization (WHO), that people should limit their intake of added sugar to no more than 10% of their total daily calorie/energy intake.”
However, advocates of the sugary tax such as the Healthy Living Alliance (HEALA), welcomed the new tax, though, they felt it did not go far enough. They had pushed for a 20% tax instead of 11%.
“South Africa is the first country in Africa to tax sugary drinks and we hope the rest of the continent will follow suit, as the sugary beverage industry has identified Africa as a major new market,” says the organization.
“We join countries such as Mexico, France, the UK and United Arab Emirates as well as a growing number of US cities in taxing these drinks that have serious health consequences.
“That morning fruit juice, lunch time iced tea and the glasses of cold drink over dinner might seem harmless, but they all add to the dangerous amounts of sugar many of us consume daily and are fast becoming a serious health concern.”
HEALA estimates that the tax on a litre of sugary soft drink will cost approximately R1.39 (US$0.12). It also assumes that producers of sugary beverages will pass most of the cost to consumers.
The organization said that consumers can avoid the new tax by choosing healthier and cheaper beverages such as water or plain milk.
“The tax on sugary drinks is one tax that no one has to pay. It’s a win-win if we refuse to pay the tax and consume water and milk instead,” the group said.
The soft drinks market in South Africa has grown from 2,294 million litres in 1998 to 4,746 million litres in 2012.
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