Picture: ISTOCK
Picture: ISTOCK

THE Treasury has strongly defended the proposed sugar tax, which has elicited a storm of protest from the soft drinks industry, insisting that the measure will assist in promoting health by reducing obesity.

However, soft-drink manufacturers have loudly warned that the proposed tax will push up prices, reduce consumption and result in large-scale job losses.

The period for public comment on the proposed tax, which is due to come into effect from April 1 next year, closed this week.

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So far about 135 written comments have been submitted and the Treasury has also held consultations with stakeholders in the industry.

A workshop with stakeholders is also planned for November.

The measure proposes taxing the sugar content of "sugary beverages" at a rate of 2.29c per gram of sugar, which equates to a 20% tax on a one-litre bottle of sugary beverage.

The tax is one element of an overall government strategy to reduce the prevalence of obesity in the country 10% by 2020. More than half SA’s adults are considered overweight and obese.

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"Studies suggest that a 10%-20% price increase of sugary beverages may be required to translate into a meaningful impact on health outcomes," Treasury chief director of economic tax analysis Cecil Morden said in a submission to a joint meeting of Parliament’s two finance committees.

"Taxes on sugary beverages are likely to encourage reduced consumption and/or products reformulation."

Morden said the use of fiscal measures to promote health, prevent disease and raise revenue was not a new idea. Globally, fiscal measures such as taxes were increasingly recognised as effective complementary tools to help tackle noncommunicable diseases and the obesity epidemic, he said.