Not only have so-called sugar taxes been proved ineffective elsewhere, but the new tax, which is due to come into effect in South Africa in 2017, could have a detrimental affect on society, particularly poorer people, KPMG warned on Wednesday.
The multinational professional services firm said research showed that whether this would have the desired impact of reducing obesity was questionable.
That there is a problem is not in doubt, says KPMG. Between 2003 and 2012, obesity rates in South Africa increased to 10.6% in men and 39.2% in women. Diabetes is expected to cost South Africa as much as R2-billion a year by 2030.
And South Africa is not alone in looking at ways to reduce the detrimental effects of high sugar consumption and the burden it puts on public health systems. Policymakers around the world are looking at options.
In February, soon after Mexico brought in a sugar tax, South Africa’s minister of finance, Pravin Gordhan, announced a tax on sugar sweetened beverages (SSBs) in his Budget speech.
KPMG raises the question whether the sugar tax on its own could nudge people towards healthier diets and lifestyles.
Lullu Krugel, chief economist at KPMG, said: “Taxes are no panacea for changing behaviour. Our research has shown that in countries where sugar taxes were introduced, there was no conclusive link between a decline in sales of SSBs and decreases in sugar consumption and hence in obesity”.
According to KPMG, there could be unintended consequences beyond the sugar and beverage industries, including further burdening lower income consumers.
“Experience internationally has shown that consumers may choose cheaper SSBs, other snacks high in sugar and fat as well as engage in offsetting behaviour, such as hoarding and cross-border shopping,” said Krugel.
KPMG said it did not underestimate the need to address the problem of obesity, but questioned whether taxing SSBs would be an effective solution if not combined with broader initiatives including education on lifestyle and healthcare.
“Regulation that has a clear focus of what it needs to achieve, where the benefits outweigh the costs and where potential unintended consequences are anticipated and addressed as soon as possible certainly goes a long way towards being considered ‘good regulation’,”says Krugel.
“The same should hold true when the proposed sugar tax is being evaluated.”
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