SAFURA ABDOOL KARIM | Take the sugar industry’s ‘sugar tax’ claims with a pinch of salt

The government’s Health Promotion Levy (HPL) is working to reduce sugar consumption and combat the rising number of sugar-related diseases in SA. Still, the sugar industry says the country’s “sugar tax” is costing it jobs. As a nation, we shouldn’t have to choose between saving jobs and saving lives. 

The truth is that South African sugar producers were losing ground to foreign growers long before the country’s HPL added a few cents to the price of a cool drink.

Though the levy is often referred to as a “sugar tax”, it is in fact not a sugar tax. Instead, the HPL targets only the sugar in some sugar-sweetened drinks.

Sugar in liquid forms such as cool drinks is especially harmful because it is rapidly absorbed into the bloodstream, causing sudden spikes in blood sugar levels. This increases risk of obesity, type 2 diabetes and high blood pressure. Today these conditions are some of the leading causes of death in the country.

Has the levy made any real impact? Yes. Here’s how

The HPL has reduced how much of this dangerous liquid sugar South Africans are consuming in two ways:

• First, the levy’s introduction led some beverage makers to reduce the amount of sugar in their products.
  
• Second, multiple studies have now shown that consumers are buying less of these taxed beverages. For instance, the HPL led to a 60% reduction in sugary beverage consumption among people in Soweto. More recently, a study in The Lancet found that South Africans slashed the volume of sugary drinks they bought by almost 30%. 

These gains have been made even though the levy adds less than 50 cents to a can of Coca-Cola.

Yet these positive results from the levy haven’t been dominating the headlines. Instead, the run-up to finance minister Enoch Godongwana’s budget speech on March 12 brought forth a wave of hyperbolic claims surrounding the “sugar tax” and its effects on the sugar industry.

For instance, the sugar lobby, led by the SA Sugar Association, called for a five-year moratorium on the HPL, saying it cost the industry R1.2bn and threatened 300,000 jobs.

While fears about job losses are justified, these must be balanced against the tens of thousands of lives lost each year due to excessive sugar consumption.

Though SA’s sugar industry is in trouble, its woes started before the HPL. In reality, cane production in SA has fallen by a quarter in the past 20 years. Sugar dumping and cheap imported sugar from neighbouring countries like Eswatini are primary culprits in this decline. 

Yet, during roughly the same period, there’s been a huge explosion in sugary drink consumption. For example, the country almost doubled its consumption of Coca-Cola products between 1991 and 2010. 

So, if sales of sugary drinks were rising, how could business be bad for growers?

In part, soft drink producers have been driving the displacement of local sugar with cheaper imports that enable them to keep the cost of their products down. For decades, local sugar production has been displaced by cheaper imports. 

After this, the sugar industry successfully lobbied for a substantial increase to sugar import tariffs. This led to a substantial increase in the price of sugar and contributed to reductions in sugar use by companies like Coca-Cola SA.

Recently, a big contributor to the sugar industry’s decline has undoubtedly been the fraudulent activities of Tongaat Hulett, which cost the industry millions. Daily Maverick reported that the Tongaat Hulett scandal was responsible for more than 5,000 job losses — five times more than can be attributed to the HPL.

Jobs or our health: why we can’t fall victim to false dichotomies 

Irrespective of who is at fault, the threats to sugar industry jobs are real. Yet, just as real are the tens of thousands of lives and livelihoods lost each year in SA to diseases such as diabetes, heart disease and hypertension that are linked to the over-consumption of sugar. 

While the HPL may have had some negative economic impact, this needs to be measured against the health and economic gains from the levy. The South African government spent R2.7bn treating people living with diabetes in 2018, and the costs for 2030 are projected to be R35.1bn. 

These costs are borne by the South African taxpayer, not the multimillion-rand industries that profit from our consumption of soft drinks. The health of South Africans and the public healthcare system are now subsidising the profits of the sugar industry. 

The HPL provides an opportunity for the government to recoup some of the costs associated with treating the diseases caused by the consumption of unhealthy drinks. The evidence of this compromise can be seen in the tax itself — the rate of the levy is less than half the rate recommended by the World Health Organization.

What should be done going forward?

There have been extensive efforts to increase the profitability of the sugar industry. However, not even the sugar industry says that South Africans’ eating more sugar is the solution.

Before the introduction of the sugar levy, the sugar industry asked the department of trade, industry & competition to support the diversification of the sugar industry to produce things like biofuel, biogas and biomass, which has the possibility to provide alternative electricity sources. This commitment to diversification was reiterated in the South African Sugar Value Chain Master Plan 2030 published in 2020.

Despite this recognition that increasing consumption of sugar is not the solution for the sugar industry’s decades-long woes, the master plan also proposes a three-year moratorium on increases to the HPL. 

The current “sugar tax” has not increased under the 2025 budget — a move that reportedly will “allow the sugar industry more time to restructure in response to regional competition”. 

However, the cold hard reality is that removing or extending a moratorium on the HPL will not ease the falls in exports or cheaper sugar imports. Nor will it fix the problems plaguing our local sugar industry. 

What a further moratorium will do is compromise the health of South Africans, in many instances leaving them unable to work. 

SA deserves actions — not false dichotomies in which we are made to believe that we must choose between jobs and lives.

• About the author: Dr Safura Abdool Karim is a Berman Institute-Oxford Joint Postdoctoral Fellow in Global Infectious Disease Ethics at Johns Hopkins University, and an Adjunct-Assistant Professor at the Columbia University Mailman School of Public Health in the US.

She’s also an Honorary Research Associate at the Centre for the Aids Programme of Research in SA. Her research focuses on the use of law to improve public health across issues of the commercial determinants of health, pandemic responses and the prevention of non-communicable diseases.

This article was sponsored by Heala, a coalition of civil society organisations advocating for equitable access to affordable, nutritious food in SA by building a more just food system.