Babies are being disadvantaged even before they leave the womb, MPs heard. People are dying early, and badly, and for no good reason, they were told. But it was only when the discussion turned to Oros that the seriousness of the proposed 20% tax on sugar seemed really to sink in.
The way the tax is proposed right now, said Tiger Brands’ Grattan Kirk to a joint parliamentary committee meeting on Tuesday, a tax on the added sugar in sweet drinks “will put me out of business in Oros”.
It did not seem to hit home, so he tried again: “Effectively, I would need to close my Oros factory,” he said.
One MP put a hand to her mouth in apparent horror. Another turned to a colleague, eyes wide. Now that they were primed, Kirk brought home his message. “Revisit the taxation rate as it applies to concentrates,” he told the legislators.
There were guarded nods of agreement around the room.
Tuesday’s hearing was the first of the combined parliamentary committee, made up of the standing committee on finance and the health portfolio committee.
At the start of a process that could have wide-ranging economic and health implications for South Africa – and which will see a rising tempo of argument and lobbying in coming months – the Oros incident was a telling one: the triumph of a simple story about consequences over complex and nuanced arguments.
By the time Kirk addressed the MPs, they had already heard from both sides warring for their minds and their votes.
The department of health had explained, as it has so many times, that sugary drinks drive obesity, which causes ill-health, which costs both lives and money.
The treasury had explained that an extra tax on sugary drinks – a new kind of sin tax – would, by the most classic of economic theories, see a decrease in consumption as prices increased.
Academics had told them that the matter was clear, and urgent, and about the children, sometimes in catchy, lyrical fashion. “We need radical intervention. We need a population intervention. We cannot afford to delay,” said University of Cape Town public health specialist Tolullah Oni.
From the other side of the aisle, the fizzy drinks’ Beverage Association had told the MPs that it wanted to be part of the solution (though the solution is probably not a new tax, it said), the Cane Growers’ Association had told them of the jobs bloodbath that would come with such a tax, and the Fruit Juice Association had expounded on the difference between the intrinsic sugar in 100% fruit juice (probably not really bad for you) and the added sugar in, say, a can of Fanta (not to point fingers, but probably not that great).
“It’s natural, straight from the farms,” the juice association’s Rudi Richards said. “Fruit juice is fresh fruit that has just been juiced.”
But, other than being visibly shocked at the potential loss of Oros, a national orange treasure, none of the urgent arguments and pleadings seemed to have the desired effect – unless the desired effect was annoyance, tending on exasperation.
“I am frustrated,” one MP said as an aside. She was not alone.
Kirk explained a complicated situation simply. The new tax proposal is designed to add R2.42 to the price of every litre of Coke, which, because of the vast volumes sold, is the baseline used in calculations.
The beloved Oros is a concentrate, which, in its undiluted form, contains a great deal more sugar than a can of Coke. It is also sold in large containers. Put that together and you get, inadvertently, what he described as “somewhere close to a 50% tax rate”.
Hence no more Oros, an upset populace, jobs lost and MPs lynched.
Everyone else, over hours of submissions and hundreds of slides, provided what MPs clearly could not fit into a neat calculation.
“We are getting very technically sophisticated submissions from both parties here, as it were,” finance committee chairperson Yunus Carrim moaned. And then, paying no heed to the academics and civil society organisations in the room, he added: “The question that arises is where do we get independent research from?”
That is a question sure to haunt the executive pushing hard for a tax on the sugar added to drinks, and the health advocates applauding it. They thought they too were telling a simple story on a par with Oros: sugar-sweetened beverages add to the burden on noncommunicable disease, a tax will reduce intake while also raising revenue, and the benefits of reduced obesity will include everything from reduced absenteeism to less money spent on kids’ rotten teeth.
But industry opponents to the tax see far greater complications.
“Black women and youth will be impacted by this sugar tax,” Mapule Ncanywa, the head of the Beverage Association, told the two committees – because they will lose their jobs, be poorer and not necessarily be any healthier.
Previously, the association’s approach included drawing attention to an apparent lack of scientific consensus on obesity. But, on Tuesday, it zoomed in on jobs, as did the Cane Growers’ Association. The latter warned that the consequences would be particularly dire for widows if local sugar sales were slashed by 28% overnight.
Both organisations agreed that obesity is a problem and that sugar “has problems”, and both argued that some combination of regulation and education is required. And, Ncanywa said, in any event, over the next three years, the association is to reduce its use of sugar “by a good 15%”.
Why that would be so without clear scientific evidence of its health benefits, and how it would not affect sugar-cane growers, was not immediately clear. But sometimes uncertainty is not a failing but a goal.
“For every scientific paper in support of a sugar tax, I will show you one that says it doesn’t work,” said Rolf Lütge of the South African Sugar Association.
Both the health portfolio committee and the standing committee on finance are expected to hold hearings on a draft tax Bill and the idea of a national road show on the issue has been floated.
“You are going to get sick of discussing this issue,” Carrim jokingly told MPs.
“We’re going to grow old and die before we can get them to accept the facts rather than industry fantasies,” a civil society activist groused several hours later.