The sugar tax doesn't work- we agree- and it destroys jobs in the process. Response to Daily Maverick

This reply to a piece on Daily Maverick naming SA Canegrowers – was rejected by the Daily Maverick, so we decided to print it elsewhere to ensure balance and fairness in the debate.

The wealthy American Michael Bloomberg is funding the South African lobby for an increased sugar tax by bankrolling NGO group Heala, via a network of NGOs. Years after colonialism ended, the billionaire is using his influence to shape SA’s food and tax policy from thousands of miles away, while hiding behind the guise of concerned South Africans. Heala has invested significantly in producing hour-long professional TV webisodes titled “Chew on This” and daily social media campaigns calling for higher sugar taxes, and stringent food labelling that would see most foods repackaged.

The independent health journalist Joan Van Dyk, who featured prominently in one of these webisodes, has now also written in favour of the sugar tax in an article for the Daily Maverick. She criticises the sugarcane growing industry without any pretence of balance or attempt to hear their side, dismisses an independent study that reported job losses following the sugar tax’s implementation, and suggests the sugar tax is necessary because there is malnutrition. Yet, surprisingly, she acknowledges what the sugarcane industry has been saying: the sugar tax does not work.

More accurately, there is no evidence, none at all, that it has led to lower rates of diabetes, a healthier population, or reduced obesity. Despite this, Van Dyk argues that the sugar tax should be increased. Essentially, she suggests if it doesn’t work, double it. It’s not the kind of logic one would want as part of any rational decision-making process. 

However, Van Dyk and, indeed, many other sugar tax lobbyists, overlook the complexity of obesity; blaming sugary drinks alone is too simplistic. Even in her own article, Van Dyk notes that poor diets and, often linked to poverty, lead to obesity.

In government and industry negotiations on the sugar tax, the government agreed to commission a nutrient intake study, one that would measure all aspects of a representative sample of South African’s diets so it could fully understand the many factors contributing to poor health.

Without information on what the average person consumes, it’s unclear how doubling the tax on sugar-sweetened beverages will address diabetes, which van Dyk claims urgently needs attention as a major killer in South Africa.

Van Dyk then reports that three out of four deaths in South Africa are related to stroke or diabetes. This, however, muddies the waters, as stroke and diabetes are distinct illnesses. They also result from multiple factors: lack of exercise, weight gain, high-fat consumption, genetic factors, diets high in red meat and processed foods, excessive intake of refined carbohydrates, lack of vegetables, fibre, fruit, and legumes, high alcohol consumption, smoking, drug abuse, and stress, particularly in a challenging society like South Africa.

Using two health conditions and their underlying causes of death to justify a sugar tax is, at worst, irrational, and at best, weak logic. If only tackling major health issues were as simple as increasing taxes on a single item; sugary sweetened drinks.

While the health promotion levy or sugar tax is clearly not a silver bullet in addressing complex health issues, it does come at a known cost: it results in job losses in a country that needs jobs.

In her critique of the industry, van Dyk dismisses the Nedlac study that showed the sugar tax caused 16,000 job losses in its first year. She labels the study “controversial” and “outdated,” yet it’s unclear how a study covering the first year of job losses could be “outdated.” Merely labelling it “dubious” without a clear explanation as to why is weak reasoning.

Van Dyk doubles down on claims by the sugar tax advocates that no job losses resulted from the tax. The unpublished study by Wits Research Institute Priceless, she cites, uses broad agricultural data over several years to argue that sugar-related jobs were unaffected, even though agriculture as a whole supports roughly 900,000 direct jobs annually, including temporary seasonal positions. However, sugarcane growing is concentrated in only two of South Africa's nine provinces and does not include jobs in sectors as varied as beef, citrus, grapes, maize, seed oils, olives, apples, vegetables, lamb, pork, poultry, and dairy.

Without disaggregating this agricultural job data to focus solely on the sugar sector, the study’s conclusions remain questionable, and the industry will continue to criticise the premise of using the entire agricultural sector’s employment data to draw conclusions about jobs linked to a single crop. The industry stands by the independent Nedlac study showing the sugar levy resulted in 16,000 job losses in its first year. Not only that two sugar mills have closed since the tax.

Van Dyk also criticises the use of past job loss estimates to predict potential outcomes if the tax increases, but fails to explain why. The past is a useful tool for understanding present and future trends, rather than simply guessing.

Finally, Van Dyk’s article conflates malnutrition with the sugar tax, which are distinct issues. She quotes labour union Cosatu, stating that labour voices are essential in the sugar tax debate, and the sugar tax is necessary because its members who are hospital staff commonly see malnutrition.

It’s tragic that 28% of children are stunted, meaning they do not get enough food and will be underdeveloped for life. Highlighting and addressing this issue is vital, but it’s unclear why van Dyk, Heala and Cosatu insist that a sugar tax would address malnutrition. If only addressing hunger were that simple.

If anything, increased taxes will lead to more job losses and potentially more malnutrition. Instead, we should do all we can to protect jobs in agriculture to avoid increasing hunger. Targeting sugary beverages with a tax, which even van Dyk admits doesn’t work to improve health, is foolhardy.

The industry will continue to call for a comprehensive nutrient intake study to understand the factors behind poor diet and ill health, while defending jobs and the sugarcane sector. It urges academic lobbyists Priceless SA to use accurate data from the South African sugarcane industry if it seeks to calculate jobs within the sector and to stop dismissing industry evidence merely because it’s commissioned by the industry.

Ultimately, too much foreign funding is influencing South Africa’s fiscal policies and NGOs, and local voices, including those from the industry, should take precedence over foreign-funded lobbyists, when trying to address ill health.

Andrew Russell is Vice Chairman of SA Canegrowers