Sugar tax may eat into the economy

In his budget speech this year, Finance Minister Pravin Gordhan announced a tax of 20 per cent on high sugar soft drinks scheduled to start next year April. Since then, there has been a great deal of public discourse about the possible impact of the proposed tax on sugar sweetened beverages in South Africa, with estimates of thousands of job losses. But at the same time, the increased pressure on the healthcare system due to obesity also requires urgent attention. Joining CNBC Africa to discuss this further is Lullu Krugel, Chief Economist and Director at KPMG. The discourse around the sugar tax imposes a central question on the role of policymakers in promoting public health while also considering the economic implications of such interventions. Lulu Krugel, in her analysis, acknowledges the rising levels of obesity in South Africa and the correlation with excessive sugar consumption, leading to a pivotal debate on whether targeting sugar sweetened beverages alone is the most effective strategy. She highlights the need to assess the economic impact of the tax, particularly the potential job losses in the beverage industry and allied sectors. The discussion also delves into the adaptability of the drinks business and the consumers' behavior towards price changes. As the government moves forward with this initiative, the debate continues on the effectiveness of the tax in altering consumer behavior and reducing the burden of non-communicable diseases on the healthcare system.