Healthy Living Alliance (HEALA) said that in Tembisa, a township in Johannesburg, it was easy to access sugar-sweetened beverages (SSBs) where advertising for SSBs was at every corner. It could no longer be ignored what multinationals were doing. Almost all schools had their names written on Coca Cola SA billboards; the tuck shops and spazas surrounding these schools advertised SSBs. Children were especially vulnerable to the manipulation of being bombarded with SSB advertising. A study conducted in Cape Town by the South African Medical Journal (SAMJ) in 2016 had found that 87% of teachers in 11 schools were either obese or overweight. Obesity contributed to lifestyle diseases such a stroke, diabetes, heart diseases and certain cancers and posed a burden on SA’s health funding and gross domestic product (GDP). Since the study had only focused in Cape Town; what was the situation in the rest of SA? The Department of Health (DoH) spends ±R20 million on advertising about healthy living; in comparison Coke spent more than ten times that budget on buying space for advertising their products.
Multinationals manipulated and deceived South Africans through false advertising and information, targeting the youth and vulnerable of SA; the same companies were being sued in various countries for false advertising.
Stellenbosch University Global Health Department said part of what they did in public health was to look at what the conditions were that South Africans were dying from. SA had managed to turn the tide in the burden of disease around HIV/AIDS but with non-communicable diseases (NCDs), the burden of disease remained particularly high. Four of the top five risks for NCDs where high Body Mass Index (BMI) was number two. The drivers of obesity were excess consumption and inadequate physical activity. If the focus was to be on excess consumption, SSBs became very important for the following reasons: They had high calorie content; Little to no nutritional value; They were processed differently by the body; They were generally consumed quickly; They did not provide one with a feeling of satiation such as solid food would. The proposed SSB tax was an example of a population-level intervention.
Economics of Tobacco Control Project (ETCP) said that SA had increased tobacco excise tax by about 540% per pack since 1990 and that had decreased consumption by about 40% to date. Revenues had increased from about R3.5 billion to about R12 billion per year in the same period. From 1993 when tobacco was first taxed, 33% of adults SAs smoked but by 2016 that had reduced to just below 20%.
Consumer Goods Council of South Africa (CGCSA) believed that the ‘better for you’ and ‘healthy food options’ initiatives its members had been participating in had to be allowed to run to its inevitable conclusion. The haste in implementing the tax had been causing confusion in terms of practicality and actions both on the ground and in government departments. In terms of scientific justification for the tax:
• The need for targeted research was required from government to receive South African realities about:
- Actual food consumption
- Affordable energy sources for the hungry and starving
- Actual consumption patterns of sugary drinks in SA and Africa had to be determined since consumption patterns were not the same as sales figures; as those were not adjusted for returns to manufacturers.
• Objective conclusive research was also required from domestic sources.
• Additionally there had to be no difference or discrimination against large or small manufacturers.
Was government not supposed to commission a thorough socio-economic impact study before deciding on the proposed SSB tax?
Rippe Lifestyle Institute said that there was very little physiological data from SA and that WHO had commissioned a randomised control trial looking at sugars and obesity and summarily ignored it, though the study had shown that if one replaced sugars for other sources of calories that made no difference. However; if one added sugars with other calorie sources that resulted in obesity though not because of the sugar and that finding had been repeated in multiple randomised control trials. The over consumption of calories was the cause of obesity and there was nothing unique about sugar. Lower levels of evidence which were being used often to talk about obesity and diabetes came from cohort and cross sectional studies. From the randomised control trials they had conducted they had found no adverse consequences and put together they simply were risk factors for heart disease, obesity and diabetes.
South African Institute of Chartered Accountants (SAICA) said in terms of the balance between individualism and government: the state had a constitutional obligation to look at people and what the limit was in terms of the right to privacy and exercising one’s right, though of course the right was not unrestricted like any other right in the Constitution. The courts dealt with the inner sanctum of what was closely related to the individual and the more one moved away from that to interacting with the community, the more the balance went towards the community and government. The question then remained whether the right or the behaviour fell within the inner sanctum or would the Committee conclude that it was something that went further away from the inner sanctum and therefore had to be weighted. How far government’s right to make policy would allow it to encroach on that right to privacy?
When looking at the effectiveness of taxes, it was the Executive’s right to make policy and it was measured against rationality and reasonability. However that was not a very high standard and the Committee would have to test whether there was any form of legitimate purpose to the proposal. Using the plastic bag levy as example, which added to the debate for the tax and against it, the initial research showed it to have been very successful however; that had tapered off. That raised the question whether there was evidence that the SSB tax would affect behaviour change and be a rational and a good instrument. The South African Medical Association had been clear that tax alone would not be sufficient to affect behaviour change. Therefore a few other things which would support the tax had to be done. If the tax route was to be taken, it also had to be considered whether it had to be a non-behavioural ring-fenced tax so as to use the money for various other ways to reduce consumption of SSBs or address specifically obesity.
Pioneer Foods said the nutritional composition of a 100% unsweetened fruit juice was that 10% of it was sugar in one way or another as intrinsic sugar. The rest was water and phytonutrients which science was not challenged. WHO also recommended the consumption of 100% fruit juice as a good alternative; which was probably why some countries introducing SSB tax had excluded 100% unsweetened fruit juice from the tax.
Pioneer Foods were asking for an exemption for all 100% unsweetened fruit and vegetable juices as they had only intrinsic sugar.
Boxmore Packaging believed the discussion had to focus on the sugar tax as had been proposed and its consequences and for that no study was needed from an academician. The discussion of the proposed SSB tax was not on 20% as proposed but rather on the consequent impact of a 200% increase in the price of sugar. Without change, volumes would decrease, which would mean less production which required fewer production lines; delivery trucks and packaging. Therefore less activity would mean fewer jobs. Another problem with the tax was its implementation; although much of the volume sat with larger players, the beverage industry was quite fragmented as there were thousands of producers many of which were invisible to organisations like Nielsen and BMI Research which read the formal retail trade mostly.
• whether government had received higher revenues when beer had been first taxed
• ETCP to give a possible scenario of the impact of the SSB tax in similar manner as to the examples presented of tobacco and alcohol.
• Whether there been studies done on the demand for sugar?
• When the sugar industry would say how much it paid its workers as to suddenly be worried about jobs seemed to be too pious; did they recognise the trade unions?
• CGCSA on how long the study on sugar addiction should take before a SSB tax could be implemented.
• What was happening in the complementary goods industry as far as employment creation was concerned in terms of the sugar industry?
Members also commented that the purpose of the proposed SBB tax was to protect SA citizens and it had heard no one talking about the cost to life, man hours and power in the country that resulted directly from diabetes, hypertension and obesity due to sugar consumption. It was amazing that the submissions seemed to be prioritizing profit over the lives of SA citizens as that was non-patriotic. The poor consumed SSBs to get energy as they were affordable alternatives and no worker worked to push their child into an early grave but work was for securing a better life for South Africa’s children. Whilst the argument from Pioneer Foods was that the fruit was natural; how natural was the produce considering GMO food.
Healthy Living Alliance (HEALA) submission
Ms Tracey Malawana, HEALA Coordinator, said that she was from Tembisa, a township in Johannesburg and represented HEALA. She said that there was a history of diabetes in her family and she was witness to her elders struggling with diabetes, stroke, and heart disease. Such non-communicable diseases (NCBs) had sometimes forced these working adults to quit their jobs as they were no longer fit to work. They had struggled to get to the nearest clinic where on arrival they queued for hours to get relief. In her township it was easy to access sugar-sweetened beverages (SSBs); where advertising of SSBs was at every corner. Her grandmother survived by consuming her own crops whilst her uncles and aunts inhabiting urban areas suffered from the maelstrom of diseases that affect South Africans. Turning a blind eye to what multinationals were doing, could no longer be allowed. Almost all the schools she had worked with had their names written on Coca Cola SA billboards; the tuck shops and spazas surrounding the schools advertised SSBs. Children were especially vulnerable to the manipulation of being bombarded with SSB advertising.
A study conducted in Cape Town by the South African Medical Journal (SAMJ) in 2016 had found that 87% of teachers in 11 schools were either obese or overweight. Obesity contributed to lifestyle diseases such a stroke, diabetes, heart diseases and certain cancers and posed a burden on SA’s health funding and gross domestic product (GDP). Since the study focused on Cape Town; what was the situation in the rest of SA?
The Department of Health (DoH) spends bout R20 million on advertising about healthy living; in comparison Coke spent more than ten times the DoH budget on buying space for advertising their products. She referenced a Coke website statement: ‘like many publicly held companies, maximizing profits for our shareholders has been a paramount objective since our founding; for that reason we have always paid a lot of attention to tax policies as these can dramatically impact our ability to grow and pay dividends’. From this statement it was clear profits for shareholders were more important than the health of citizens and such companies made profits from people’s sickness. Big capital could not be allowed to interfere with the democratically enjoined functioning of SA’s government and people’s health. Multinationals manipulated and deceived South Africans, through false advertising and information, targeting the youth and vulnerable. These same companies were being sued in various countries for false advertising. The country was subsidising the purchase of SSBs with the health of its citizens, their lives and the health of its economy.
Ms Carol Hendricks, Diabetes SA, support group coordinator, said she was 60 years and had been living with diabetes for 31 years. Her mother who had also been diabetic had died of a stroke, which was a complication of diabetes. Ms Hendricks had for 17 years been running a diabetes support group in Mitchells Plain, Cape Town. She formerly had been diagnosed with obesity but through a change of lifestyle and removal of SSBs in her diet, she had lost 25 kilograms and had managed to help others to manage their diabetes as well. She was concerned that children as young as 12 years old were developing type II diabetes through unhealthy lifestyles. SSBs had become too normalised without their effects on the body being well known as people bought 2 litres bottles daily consuming them within hours of each day. She was in support of a SBB tax as she believed it would make a difference. As they became more expensive there would be more people who will pay attention. She was also advocating for the money from the tax to go towards prevention of diabetes programmes.
Ms Malawana said that supporting taxation of SSBs would be momentous as the question would be whose side Parliament was on; monopoly big capital or the children of SA. The tax was the beginning as there remained a lot to be done going forward; such protecting children from targeted advertising.
Stellenbosch University (SU) Global Health Department submission
Dr Trevor Pillay, SU Public Health Registrar, said registrars were medical doctors that had specialised in public health. Public health focused on diseases, how they were measured and strategies to prevent and improve ill-heath.
Dr Sadiyya Sheik, SU, Public Health Registrar, said that what they did at public health was to look at what the conditions were that South Africans were dying from. SA had managed to turn the tide in the burden of disease around HIV/AIDS but with Non-Communicable Diseases (NCDs) the burden of disease remained particularly high. Four of the top five risks to diseases related to NCDs where high Body MassIndex (BMI) was number two. The drivers of obesity were excess consumption on one hand and inadequate physical activity on the other hand. If the focus was to be on excess consumption, SSBs became very important for the following reasons:
- They had high calorie content.
- Little to no nutritional value
- They were processed differently by the body.
- They were generally consumed quickly.
- They did not provide one with a feeling of satiation such as solid food would.
She said the number of products per person per year had been increasing steadily from 1992-2010 beyond the world average. In one-two year olds, SSBs were the number three most prominently consumed beverages.
Dr Pillay said that the DoH had produced two separate strategic plans on prevention of obesity and NCD with a range of intervention strategies. Some of those worked differently at different levels of society. The proposed SSB tax was an example of a population-level intervention.
Economics of Tobacco Control Project (ETCP) submission
Mr Evan Blecher, PhD, Economics of Tobacco Control Project (ETCP) presented on behalf of Prof Corne van Walbeek. He said that SA had increased tobacco excise tax by about 540% per pack since 1990 and that had decreased consumption by about 40% to date. Tax revenue had increased from about R3.5 billion to about R12 billion per year in the same period. From 1993, when tobacco was first taxed 33% of adults SAs smoked but by 2016 that had reduced to just below 20%.
Dr W James (DA) said looking at the numbers, the health case sounded quite weak as all the Committee had heard in terms of empirical evidence was that the premise that a SSB tax would affect consumption was quite wrong. What then remained of the proposed SBB tax in his view was an effort to increase revenue. He appreciated the SU submission as it was the first honest one he had heard as it had alluded to a range of factors contributing to ill-health, instead of only SSBs.
Mr A Lees (DA) noted the ETCP had made the case that SSB taxation was a bad tax instrument. In terms of how beer had been taxed, the ETCP surely would have looked at what the revenues were. Did government receive higher revenues when beer had been first taxed which eventually tapered off after the tax was introduced?
Ms T Tobias (ANC) said she was not satisfied by the assertion made by ETCP about nicotine and its effects on health as her mother had died from smoking. ETCP was giving the impression that if investment was made on advertising products that would affect the industry’s revenue. However; companies would just switch to using sweeteners instead of sugar from cane which would have an adverse impact on sugar farming. Could ETCP give a possible scenario of the SSB tax impact in a similar manner as the examples of tobacco and alcohol he had provided.
Mr S Buthelezi (ANC) said what had also been lacking from the submissions had been the question of drawing similarities between diseases from tobacco and sugar. He wanted the presenters to say whether sugar had any beneficial effects or not; for him it was not prudent to compare sugar and tobacco intake behaviour as he knew no benefits of smoking tobacco. Had studies been done on the demand for sugar?
Mr A Shaik-Emam (NFP) said it was difficult to make comparisons when talking about sugar, especially the effects of the proposed SBB tax. Comparing it with drug abuse, people were not being forced to take drugs so then should government simply close down all the rehabilitation centres as well? The purpose of the proposed SBB tax was to protect SA citizens and he had heard no one talking about the cost of life, man hours and power in the country due to sugar consumption whih resulted in diabetes, hypertension and obesity. What had to be considered were the tax burden and the pressure on the public health system which resulted directly from capital sharing and profit making at the expense of people. Indeed SSB marketing was so effective that one believed SSBs were the best thing that people could consume.
Mr P Mabe (ANC) was struggling with how to balance healthy living versus the protection of jobs as a social impact resulting from the SBB tax. He agreed with Dr James that going into a shop and buying a soft drink was a personal choice; how could such behaviours be changed?
Dr P Maesela (ANC) said it was amazing that the submissions seemed to be prioritizing profit over the lives of SA citizens as that was non-patriotic. The poor consumed SSBs to get energy as they were affordable alternatives. No worker worked to push their child into an early grave but work was for securing a better life for their children. He agreed that unemployment was problematic. However, but having a job so that your children could die from consuming SSBs whilst your employer made super profits, was not a job in any event, because manufacturers of SSBs did not consume SSBs.
Mr Y Carrim (ANC) said that he did not agree that the health case for the SBB tax was colluded and was politicised as he was compelled by the consistency of the submissions. The stakeholders who wanted the tax to be imposed had to convince the Committee how it could be imposed without jobs being shed, and to ensure that African emerging sugar cane growers would not be adversely affected. Secondly when would the sugar industry say how much it paid its workers, as for them to suddenly be worried about jobs seemed to be too pious; did they recognise the trade unions? One useful thing he had heard was that the SSB tax could be used to secure jobs. He disagreed that people made an individual choice to consume SSBs, because if that argument were to be allowed, the state would never intervene in anything. He added that presenters could respond in writing if the time allocated was too limited for their responses.
Mr Mathew Parks, Head: Cosatu Parliamentary Liaison Office, replied that tempting as it was for the SSB tax to be seen as a weak revenue tool by experts; the Departments of Trade and Industry, Economic Development as well as Agriculture, Forestry & Fisheries were the line function departments whose expert opinion had to be sought on whether they agreed with the proposal. Did they have plans around possible job losses? If Deloitte projection of a R4 to R11 billion revenue from the proposed SSB tax was correct, it would be difficult not to blame government for not using that revenue tool, given the budget shortfall.
Indeed sugar could not be compared to tobacco which had no value; rather managing the over consumption of sugar was the point. However; over taxation was problematic because the intention was for people to drink more water but would this happen? Municipalities were hampering communities from doing exactly that with their water tariff increases of about 50% which made the situation a bit more complex.
Though the anti-capitalist stance was appreciated; unfortunately, workers were stuck with the effects, especially farmworkers who earned R120 per day with no other subsidy. Cosatu’s concern was that agriculture had already been bleeding jobs, therefore there could not be a big bang approach but a planned one where all government departments would sit with industry and labour to find a way of transitioning properly without collapsing industry and shedding 50 00 jobs. Moreover, there was the expectation for the agricultural sector to compete with the European Union, Brazil and the United States when those country’s agricultural sectors were heavily subsidised. He said that certainly the country could not trade jobs for health and Cosatu believed there had to be a considered transition approach.
Certainly industry had to respond to how much they were paying workers as the Chairperson had asked. Mr Parks had alluded to the R120 a day that farmworkers earned. Fewer than 5% of those farmworkers had joined unions because it was almost impossible for unions to access farms as farmers were notorious for responding to such attempts with guns. Farmers generally threatened farmworkers with dismissals if they joined unions.
Ms Malawana said, although she shared similar sentiments with Cosatu about job losses, what had been alluded to numerous times was that the revenue generated from SSB taxation should assist government and also force SSB producers to produce more healthy drink alternatives.
Dr Pillay responded to the comment about the weakness of the health case for SSB taxation, pointing to the numerous occasions in the hearings where the ills and projections about obesity and NCDs had been clearly shown. A link with SSBs had also been exhibited and that was not the only ill within the risk factors. Not only did SSBs as a risk factor have impact on new cases of diabetes but it also had an impact on glycaemic control and the consequences of stroke down the line.
Regarding collusion, when SU heard about the proposed SSB tax, the public health students themselves got together to discuss the importance of the proposal as it was relevant to their field of study.
In terms of where then should government stop if it started with taxing sugar, he said the challenges created by SSB consumption was everyone’s problem and all present had to start thinking about what each could do in their own families to start to decrease SSB consumption so as to increase health benefits.
On the matter of personal choice to consume, Dr Pillay said that though it was regulated that everyone had to wear a seatbelt, indeed it was an individual’s choice to wear it or not. If an individual decided not to wear a seatbelt they would face the consequences that followed. He commended National Treasury on introducing the proposal as it had brought this topic that had needed to be discussed to the fore and from the SU submission it could be seen that SA was amongst the sickest nations in the world.
Mr Blecher said that in terms of potential conflicts of interest in academia; their funding for the work on alcohol had come from the World Health Organisation (WHO) country office which effectively came from DoH contributions and the work on tobacco had been similarly funded but included the World Bank study.
Regarding collusion, he was meeting the academics from SU at the hearing for the first time. He said he had never said the tax was a poor tax instrument as he believed it to be a good instrument but the proposed tax was rather a poor revenue raising instrument. If the target was to raise R4 billion; why would Treasury and the Committees go through the work they had gone through to raise that money from a new tax when they could simply increase the annual tobacco and alcohol excise tax and the fuel levy by one or two percentage points more than normal to raise that money. Treasury had gone through an extraordinarily inefficient effort if the motive was to merely raise R4 billion. He did not believe that Treasury would go to such an effort if the motive was simply revenue generation as that simply made no sense in terms of the big picture, although the tax would certainly contribute to revenue generation no doubt.
Mr Blecher said he was not juxtaposing tobacco or alcohol use to sugar use; he had been juxtaposing how tax structures should be designed on SSBs so that the best intended effect could be realised. The way to do that was to look at the experience of tobacco and if that was not the right model, then look at the experience of alcohol before deciding on a final model to generate the intended outcome from the Treasury proposal.
The demand for tobacco was relatively price inelastic and there were studies on the demand for SSBs where it had been found that SSBs were nowhere near being inelastic as tobacco or alcohol. The elasticity figures had come out between -0.8 and -1.2 which meant that a 10% increase would reduce consumption between 8% and 12%. This meant the proposed tax would be very effective in reducing consumption; more effective than it would be for tobacco or alcohol. Nicotine was the addictive substance in a cigarette or tobacco but was not the stuff that caused the harm most of the harm in tobacco was caused by tar, carbon monoxide and carcinogens. On sugar volumes, if the tax was enacted, it would cause decrease in consumption of SSBs. That said SA was to a large degree a net exporter of sugar and seeing that sugar was a global market, the effect on that market on sugar over the next few years would also need to be considered; as the sugar market was already under pressure. Would the tax significantly further contribute to that pressure? Probably not since agriculture on the supply side and agriculture in SA had been on decline for at least two decades as a result of subsidies.
Mr Carrim said Mr Parks could certainly try to get five Committees and the relevant Ministers to sit down on the matter although the proposal was driven by Treasury and DoH so the Committees that were conducting the hearings were correct to do so. They would invite all relevant Committees when the Bill came to Parliament, if it ever made it to Parliament. It was also understandable that within the same political party there would be emphasis on different aspects as it was still in the early stages; ultimately each party would meet and take a collective decision where the majority would prevail. Everyone present specifically civil society, stakeholders and the media should know that no decisions had been taken by the Committee or individual parties on the matter.
Consumer Goods Council of South Africa (CGCSA) submission
Mr Gwarega Mangozhe, CGCSA CEO, said the Council believed that ‘it’s better for you’ and 'healthy food options’ initiatives its members had been participating in had to be allowed to run to their inevitable conclusion. The haste in implementing the tax had been causing confusion in terms of practicality and actions both on the ground and in government departments.
The need for targeted research was required from government to receive South African realities regarding:
- Actual food consumption
- Affordable energy sources for the hungry and starving
- Actual consumption patterns of sugary drinks in SA and Africa had to be determined since consumption patterns were not the same as sales figures; as those were not adjusted for returns to manufacturers.
- Objective conclusive research was also required from domestic sources. For example, it had been assumed that reducing SSBs consumption would lead to an increase in milk consumption which could be the case in Europe and other developed countries but certainly might not be applicable in SA as a majority of citizens were lactose intolerant.
- Additionally there had to be no difference or discrimination against large or small manufacturers.
Was government not supposed to commission a thorough socio-economic impact study before deciding on the proposed SSB tax?
Dr James Rippe, Cardiologist and Researcher: Rippe Lifestyle Institute, said that there was very little physiological data from SA as a result he would be relying on data from the US and Europe. WHO had commissioned a randomised control trial looking at sugars and obesity and then summarily ignored it, though the study had shown that if one replaced sugars with other sources of calories that made no difference. However, if one added sugars to other calorie sources that resulted in obesity though not because of the sugar. That finding had been repeated in multiple randomised control trials. The over consumption of calories was the cause of obesity and there was nothing unique about sugar.
He had attended a Treasury workshop where it emerged that estimates where ranged from 3% to 30% calorie kilojoules without any real knowledge of how much sugar was consumed by the average South African. Lower levels of evidence which were being used often to talk about obesity and diabetes came from cohort and cross sectional studies. Dr Rippe believed such evidence was not proper to be used to inform public policy. His research institute had been studying for over 30 years how lifestyle issues interact with health and he had seen thousands of patients with obesity and diabetes with 80% of those diabetics dying of heart disease and not from their diabetes. From the randomised control trials they had conducted, they had found no adverse consequences came from any of the parameters listed in his submission and put together they simply were risk factors for heart disease, obesity and diabetes.
He said there were no differences between SSBs and other sources of calories when it came to health effects but he was certainly not advocating for over consumption of SSBs. There was an urgent need for data on SSB consumption before they were blamed for things which the world’s top literature did not support. SA would be a continent leader if its government commissioned such a study which would inform better public policy choices and decisions.
South African Institute of Chartered Accountants (SAICA) submission
Mr Pieter Barber, Senior Executive, SAICA, said the Committee had the most challenging job to make a decision from sometimes contradictory information which had been given it over the hearings. SAICA’s submission would be focusing on some of the principles that the Committee could consider when looking at the SSB tax. It would also look at the principles underpinning behavioural taxes, their effectiveness and the idea of a holistic approach in dealing with a big problem in SA.
In terms of the balance between individualism and government: the state had a constitutional obligation to look at people and what the limit was in terms of the right to privacy realm. Once again then it went down to government having to leave one alone as one would be exercising their right, though of course the right was not unrestricted like any other one in the SA constitution. The courts then dealt with the inner sanctum right of what was closely related to the individual and the more one moved away from that, to interacting with the community, the more the balance went towards the community and government.
The question then remained whether the right or the behaviour fell within the inner sanctum or would the Committee conclude that it was something that went further away from the inner sanctum and therefore had to be weighted; and secondly how far government’s right to make policy would allow it to encroach on that right to privacy.
When looking at the effectiveness of taxes; it was the Executive’s right to make policy and it was measured against rationality and reasonability. However that was not a very high standard and the Committee would have to test whether there was any form of legitimate purpose to the proposal. The question following would be whether there was any legitimate purpose and rationale for the proposal?
For clarity, there was a policy to change consumer behaviour in SSB consumption, it was not to collect revenue or compensate and that difference was important when looking at whether a tax would have the intended effect of changing consumer behaviour.
Indeed imposing a consumer behaviour change was actually a higher threshold than having had Treasury simply say it needed to get more money. Furthermore it had to be asked whether consumption was a behaviour habit or addiction: some of the submissions spoke to and against the latter and former which left that to the Committee to decide as well.
Using the plastic bag levy as an example, which added to the debate for the tax and against it, the initial research showed it to have been very successful however; that had tapered off. That raised the question whether there was evidence that the SBB tax would affect behaviour change; that it is a rational and good instrument. The South African Medical Association had been clear in that regard that tax alone would not be sufficient to affect behaviour change. Therefore a few other things to support the tax had to be done.
An estimate was that the world produced 1.6 billion tonnes of sugar and that was more than wheat, potato and rice combined production in the world, though there was uncertainty about the accuracy of the data, but it led to the question why a non-primary foodstuff was produced in such amounts.
If the Committee were to conclude SSB consumption was an addiction, would increasing the price of an addictive substance necessarily affect consumption? Though some submissions had affirmed an effect, it however needed to be understood that if the tax was raised as an excise or customs duty, consideration would have to be given to the possible impact on the Southern African Customs Union (SACU) and its members in terms of the money ending up in that pot for redistribution.
If the tax route was to be taken it also had to be considered whether it had to be a non-behavioural ring fenced tax so as to use the money for various other ways to reduce SSB consumption or address specifically obesity.
Looking at a win-win situation, the businesses perspective from the earlier hearings had alluded to changes as would be brought about by the SSB tax, could present new opportunities and already they were trying to do other things in the biofuels industry. Lastly, a lot of business had said if the alternative would be not making SSBs, what else could be done with the sugar? If SA said it still wanted to keep its sugar production and that it would repurpose it; then, as it had been done in Brazil where that government had taken that sugar business from agriculture and repurposed it for ethanol production; that then would help the energy mix for automobiles creating an offset for agricultural produce. Alternatively if SA government did not want to repurpose but wanted alternative crops apart from sugar, what would those crops be?
Pioneer Foods submission
Mr Martin Neethling, Pioneer Foods Chief Marketing Officer, said the nutritional composition of a 100% unsweetened fruit juice was that 10% of it was sugar in one way or another as intrinsic sugar. The rest was water and phytonutrients which science was not challenged. WHO also recommended the consumption of 100% fruit juice as a good alternative; which was probably why some countries introducing SSB tax had excluded 100% unsweetened fruit juice from the tax. Pioneer Foods were asking for an exemption for all 100% unsweetened fruit and vegetable juices as they had only intrinsic sugar
Boxmore Packaging submission
Mr David Drew, Boxmore Chief Commercial Officer, said that Boxmore was one of the larger suppliers of packaging to the soft drinks industry and they produced about 4 billion units that went to beverages. He had attended most of the hearings on the SSB proposed tax and he was not satisfied that the tax was being properly unpacked and analyzed and he hoped he could provide a new perspective on that. There also had not been enough focus on providing an alternative or compromise which was desperately needed, having listened to the debate.
Mr Drew believed the discussion had had to focus on the sugar tax as had been proposed and its consequences and for that no study was needed from an academician. The discussion of the proposed SSB tax was not on 20% as proposed but rather on the impact of a 200% increase in the price of sugar. Without change, volumes would decrease, which would mean less production which required less production lines; less delivery trucks and packaging. Therefore less activity would mean fewer jobs.
- the number is on boxmore’s presentation Gail.
Another problem with the tax was its implementation; although much of the volume sat with larger players the beverage industry was quite fragmented as there were thousands of producers, many of which were invisible to organisations like Nielsen and BMI Research which read the formal retail trade mostly.
Dr S Thembekwayo (EFF) asked CGCSA how long the study on sugar addiction could take before a SSB tax could be implemented. Dr Rippe had said there had been no conclusive evidence that sugar had adverse effects at multiple levels of human consumption. She was interested in what results could be produced if a study on the effects of sugar were conducted in SA.
Mr Lees said that SAICA did not seem to have a definite position on the debate and he wanted to know why that was. There had been an orchard at his homestead during his upbringing and the intrinsic sweetness in the fruit then was not similar to the fruit of late. There had been a huge amount of GMO (genetically modified organisms) that had occurred and indeed whilst the argument from Pioneer Foods was that the fruit was natural; how natural had it been really in terms of the GM work that had been done on produce over the decades? He was excited how big Boxmore had become and certainly he had not thought much about the impact on packaging and it was good to have received that submission as it also had involved the real taxation.
Dr Maesela said that the Constitution was clear that all South Africans had a right to good health which was the purpose of the hearing. Government had a right to encroach on the attitude that damaging consumers’ health was fair by predators. The tax could possibly not change behaviour but it certainly was a measure to moderate the harm SSBs did to health. WHO and eminent scholars and students of NCDs had indicated that SSBs contributed to obesity which was a contributing factor to ill health. No one could disagree that obesity was unhealthy; therefore it could not be correct to say there was no adverse effect from sugar consumption even if the tests had been done somewhere else. The world did not need to produce a substance called cocaine as the people in Bolivia chewed coca leaves with no adverse effects for decades but cocaine was a scourge of the earth to date. The bottom line is that something that sent thousands of people to the cemetery was not acceptable. An apple a day kept the doctor away but if one drank a litre of pure apple juice; pure or not, that sent people to cemetery
Mr M Hlengwa (IFP) agreed with Mr Carrim that the submissions were biased and compartmentalized and did not want to acknowledge the other point of view, which was problematic. Emphasis was being made about alternatives being needed in dealing with obesity without touching SSBs. He was interested to hear all interested parties present to Parliament a comprehensive set of solutions as part of a broader alternatives package; as it had been hammered that the tax would not be the panacea to NCDs. Was industry in disagreement with what the health practitioners had said about obesity and NCDs?
Mr Buthelezi said whenever solutions were deliberated on the current context in the country had to be considered. SA was a country with low economic growth and jobs were being shed at a high rate. What was happening in the complementary goods industry as far as employment creation was concerned in terms of the sugar industry? There remained a lot of research to be done on the matter of the SBB tax.
Mr A Shaik-Emam (NFP), Health Portfolio Committee, said he was disappointed that a very biased and diluted submission from CGCSA had been given to the Committees. There had been the assertion that SA did not have statistics and they had in fact been using those from the United Kingdom and United States which were not suitable. Following that a cardiologist from the UK gave evidence that the SSBs were not at fault, although in some US states and the UK, a SBB tax had been introduced. The vicious capitalization of industries was such that three people in SA would own 50% of a beverage company making SSBs which would put South African citizens in private hospitals which were also part owned by the same people cycling the money. He said that although there would job losses the enormous amounts of money already made by the beverage companies could sustain jobs if they agreed to reduce their profit margins. The statistics from the tobacco case showed clearly approximately 20% less consumption due to a tax being put in place. The intention was to protect the people of SA more than anything else as SA had been shown to be the second sickest nation in the world.
In response to Mr Shaik-Emam's comments, Dr James said he had never heard more uninformed gibberish and he was glad that the Finance Portfolio Committee would be the final decision makers on whether SSBs would be taxed or not and he had been somewhat embarrassed by what Mr Shaik-Emam had said.
Mr Mabe was concerned if the view that it was not known how much sugar South Africans consumed came from outside or whether it had been informed by a South African baseline. The health and protection of jobs of South Africans were both priorities of Parliament.
Dr Karin Blignaut, CGCSA Executive: Food Safety Initiative, replied on the question of targeted research, saying the terms of reference and how long it would take would depend on who would have been briefed; what the terms of reference were and what methods would have been used. Using one method could shorten the length of the study but could compromise its thoroughness; therefore Dr Blignaut had no definitive answer. It would not take years as SA had the organisations to undertake such work.
On the sweetness of a fruit, she said it had to be recalled that fructose was about 180 on the scale of sweetness whereas glucose was only 100. Therefore the sugar in fruit sometimes tasted sweeter though sometimes it was less than glucose.
On a comprehensive set of solutions, she could not agree more as the problems of NCDs were not something to be addressed in singularity and she was concerned as a scientist. She said that although some people were confused, her hint was that where a scientist would look to the truth; the value of the information received had to be evaluated. When one evaluated science no matter from where in the world a report came; the first thing was to look for cause and effect. For example; if studying the number of children in a house and there happened to be storks nesting in the roof and there was a correlation between the number of children and the storks nesting in the house, that did not mean storks caused babies. When dealing with such a complex matter, the information had to be scrutinised thoroughly from a scientific perspective as the outcome would affect the hungry and the poor.
Dr Rippe said he was actually from the US and SA was in the fortunate position of having a distinguished Medical Council and meaningful data could be sourced about what was actually being consumed in SA within a couple of years. Already eminent researchers from SA had made very impassioned commentary about the multiple causes of obesity. Sugar addiction was a very slippery slope as addiction had a very particular meaning in medicine. There remained very little evidence that food addiction existed as the effects were not similar to cocaine or alcohol.
The essence of his sentiments on adverse health effects, were the difference in high levels of randomised control trials or meta analysis and Dr Rippe had submitted the paper his Institute had published in January 2017 which had all the literature comparing the cohort studies and cross sectional studies undertaken. For example, a problem of a cohort study was that for every can of Coca Cola one consumed one increased the risk of diabetes by 26%. That was absolutely wrong because that was an association probably between the whole diet, the lifestyle and possibly Coca Cola was a marker for that. Since that was not randomised control data, there was a lot of emotional data that was being presented as though it were true. Obesity and diabetes were very serious issues which needed high level scientific and medical communities in countries to be involved as that would allow high level academicians to get involved. Dr Rippe believed there was currently intimidation as academicians did not want to be seen as taking on the politically correct view that it was sugar that was causing diabetes and obesity. The high level research certainly did not support that view rather it spoke to the fact that South Africans were eating too many calories; not exercising enough or it was South Africans’ whole diet which was problematic.
Mr Barber said health practitioners had to a large extent made the smaller natural causality argument between sugar and obesity which had not been necessarily the question SAICA had been trying to address. Rather the question had been whether the specific instrument, which was a excise tax on specific goods, would in fact reduce obesity. On the question of what SAICA’s position was. SAICA could only guide the Committee when it could causally link sugar to obesity. That had been the difficult question to answer. SAICA had not seen a conclusive discussion in linking sugar consumption with NCDs or obesity, or the SBB tax and a reduction in SSB consumption.
Mr Neethling replied that there was a massive export industry which was more advanced and a lot of the good fruit ended up in Europe. There were regulations which Pioneer Foods followed and SA was essentially a non-GMO country as far as the fruit was concerned. Indeed Pioneer Foods advocated for an apple a day to keep the doctor away but if one did not have access to an apple readily or wanted something to drink with their meal; a fruit juice was the perfect companion but not in excess. More than 60% of Pioneer Foods sales were in little fruit juice boxes that fitted in children’s lunch boxes and were equivalent to one fruit portion. In their bigger boxes Pioneer Foods made special reference to what a single fruit portion was and they were certainly not for drinking a litre of fruit juice at one sitting.
Pioneer Foods was not confused about its role in nutrition as their food policy was clear and was included in the submission annexure. Pioneer Foods supported the policy and national health objectives and outcomes, which government collectively sought to address through a package of measures to control and prevent Non Communicable Diseases (NCDs) as well as obesity. It supported the DoH’s Strategic Plan for the Prevention and Control of NCDs 2013-2017 as well as the National Strategy for the Prevention and Control of Obesity 2015-2020, including the set target of reducing obesity prevalence by 10% by 2020 and measures identified to address NCDs, and more specifically unhealthy diets.
Whether Pioneer Foods agreed with the views of health practitioners and scientists, but Mr Neethling asked which part as there was no consensus amongst all the presenters, particularly the outrageous overreach in today about advertising and mind control. Pioneer Foods was owned by shareholders including pension funds and many other asset managers.
Mr Drew said the Committee had to try to find a balance and as a packaging business they possibly were not agreeing with all the science but agreed something needed to be done. Boxmore’s contribution was so that the right solution could be found. Boxmore was not objecting to a sugar tax in principle but objected to the tabled version of the SSB tax. Parliament had to find balances between encouraging healthy living choices in consumers by legislating tax increases and also protecting industry and jobs. Boxmore understood why Parliament wanted to legislate a tax but their request was that what had been tabled should be reconsidered.
Ms Tobias said what scientist had to account for was the moral compass that Parliamentarians carried as a responsibility of the actions of the industry. Very little as remedial action had been suggested by the sugar industry when in fact the hearing was about the fact that a tax would be levied on SSBs as part of revenue collection and as part of a collective approach into curbing obesity. The joint Committees had received very few recommendations and would therefore consider the opinions that had been expressed in the submissions to formulate their own recommendations.
Co-Chairperson Mahlalela concurred with Ms Tobias that the issue for discussion at the hearing had been what needed to be done to curb obesity and the incidence of NCDs with one strategy being to introduce tax, though there were other strategies which the DoH were implementing.
Ms Lynn Moeng Mahlangu, Chief Director, Health Promotion, Department of Health, said the DoH had used available research that supported the direction it had taken. The strategy had been developed by a team of people including researchers and the approach had been multisectoral and multi-pronged with the SSB tax as one action. The actions in their entirety had to contribute to the reduction of obesity and over the past years studies had shown that obesity had increased in SA. By 2020 or 2025 these numbers would have increased dramatically if government did not act. The benefits of the sugar tax would be realised by the children of SA as so far in the world because countries had been implementing one or two strategies at a time, obesity had not decreased. DoH had identified all the causal factors and was saying SA had to implement all that was possible to implement to start addressing the risk factors. The submissions had spoken to the burden on the health sector if government did not act. There was evidence that liquid sugar compared to other types of sugar had more dire consequences; government could not just start taxing everything. To deal with the view that sugar had some benefits, Ms Matsoso said that everything a human being ate was absorbed as glucose without the foodstuff being sugar necessarily.
The calculation by the sugar industry on job losses had only been based on drop in SSB sales without factoring in the increase in sales of healthier alternatives which the same industry would be producing as there would still be a need for warm bodies to produce, package and market the healthier alternatives. Recently DoH had engaged Woolworths on various options; reformulation and removals of sweets from aisles. Woolworths had reported an increase in sales of healthier alternatives where it had removed sweets which was what DoH expected would happen with the rest of unhealthier products. Indeed as the sugar industry had reported, there would be a reduction in SSB sales which was the intention of DoH.
Mr Lutando Mvovo, Director: Tax Policy, National Treasury said that since it had published the draft policy paper on SSB tax, it had received about 144 written submissions which it had processed. For the budget speech by the Minister of Finance, Mr Pravin Gordhan, all those submissions would have been considered. In the draft policy, Treasury had been clear that the tax was one instrument that had to be implemented in dealing with NCDs and obesity. Tax and non-tax instruments were not mutually exclusive because it did not mean that non-tax measures would not be implemented or that Treasury would not consider them.
Currently in alcohol and tobacco regulation, Treasury applied both tax and non-tax measures. It was important to change the environment to encourage consumption of healthier products. Certainly, pricing was one way of addressing this because if SSBs remained cheaper than healthy alternatives, no gains would be made.
Mr F Mahlalela (ANC), Chairperson of the Health Portfolio Committee, thanked all stakeholders that had presented at the hearing that day. He had thought that Treasury had indicated that the motive behind the tax was not only about revenue generation but rather the incidence of NCDs and their impact on the economy. He would have preferred to hear from the sugar industry on the positives in terms of benefits government had made towards it as government had signed the Economic Partnership Agreement (EPA) with the EU which had substantially increased the amount of sugar that had to be exported to the EU.
Mr Carrim said that, except those structures that had opted to present after the budget speech, those organisations that had presented would be allocated less time at the public hearing on the Bill if it were to be tabled. He clarified that an earlier opinion he had expressed essentially spoke to health experts not being tax experts and the industry scientists not being medical experts. Furthermore, he would have ideally preferred a health expert that had not taken a public position on the matter who could also understand the tax implications. His observation was that sugar had harmful effects from most submissions at the hearing to date and therefore the Committees simply had to determine what role a SSB tax would play in a multipronged approach in the need to ensure that not more jobs would be lost unnecessarily and the emergence of African cane farmers would not be stifled.
Mr Carrim said that the Committee was telling Treasury to engage more with stakeholders so that common ground could be found and secondly there could be the consideration of an incremental approach although he was not concluding on the matter.
The meeting was then adjourned.
- Submission Congress of South African Trade Unions
- Congress of South African Trade Unions presentation
- Submission Consumer Goods Council of South Africa (CGCSA)
- Submission Dr Rippe
- Submission Food & Allergy Consultancy & Testing Services
- Submission Glycemic Index Foundation of South Africa
- Submission Healthy Living Alliance (HEALA)
- Submission South African Institute of Chartered Accountants (SAICA)
- Submission by Boxmore Packaging
- Submission University of Cape Town
- Economics of Tobacco Control Project
- Submission by Pioneer Foods
- Submission Stellenbosch University (SU) Global Health Department
Carrim, Mr YI
Dunjwa, Ms ML
Buthelezi, Mr S N
Hlengwa, Mr M
Jafta, Mr SM
James, Dr WG
James, Ms LV
Lees, Mr RA
Mabe, Mr PP
Maesela, Dr P
Mahlalela, Mr AF
Mahlangu, Ms DG
Maphanga, Mr W B
Shaik Emam, Mr AM
Thembekwayo, Dr S
Tobias, Ms TV