S.A to implement sugar sweetened beverages tax from April 2017

South Africa is gearing up to implement a sugar-sweetened beverage tax starting in April of next year. This move has sparked a heated debate, with Econex analyzing the potential health and economic benefits of the proposed tax. Dr. Paula Armstrong, an economist at Econex, recently discussed their research findings in an interview with CNBC Africa. According to Dr. Armstrong, there are significant uncertainties surrounding the health outcomes that the government expects to achieve through this tax. One of the main concerns raised is the consumer response to the increase in prices, also known as price elasticity of demand. Dr. Armstrong pointed out that the consumption response to price hikes may not align with the Treasury's projections. While the government believes that a 20% tax on sugar-sweetened beverages will lead to a decrease in obesity rates, Dr. Armstrong expressed doubts about the effectiveness of this strategy. She raised the issue of consumers potentially substituting sugary drinks with other sources of sugar, which was not accounted for in the research cited by the Treasury. The economist emphasized that a mere 36-calorie decrease in daily energy intake from the tax is unlikely to have a significant impact on obesity rates. Dr. Armstrong highlighted the importance of considering the broader context of sugar consumption, including other sugary beverages like pure fruit juices. She noted that the focus on taxing sugar-sweetened beverages alone may not address the larger issue of sugar consumption in the population. When asked about alternative solutions to tackle sugar consumption, Dr. Armstrong suggested product reformulation, public education campaigns, and industry interventions as potential strategies. She stressed the potential burden of a 20% price increase on sugar-sweetened beverages, especially for lower-income consumers. In conclusion, while the sugar-sweetened beverage tax proposal aims to address obesity and promote healthier choices, the effectiveness of this measure remains uncertain. Dr. Armstrong's insights shed light on the complexities of combating sugar consumption and highlight the need for a comprehensive approach to address this health concern.