Business

Sugar tax could cause 60 000 job losses

2016-08-21 15:00

The beverage industry is fighting the “discriminatory” soft drink tax proposed by Finance Minister Pravin Gordhan in his February budget, warning that if the 20% surcharge on sugar-sweetened beverages goes ahead, 60 000 jobs will be lost.

In a joint press briefing this week in Port Elizabeth, Coca-Cola Beverages Africa, along with smaller bottlers Twizza and Little Green Beverages – manufacturers of the carbonated drink line Refreshhh – said they would fight what they called the “murderous and economically suicidal” tax.

They have until tomorrow to file their representations to Treasury as part of public submissions, and have called on the Eastern Cape government and Nelson Mandela Bay Municipality for support, saying the region would be hard hit by the projected job losses.

Also opposed to the tax is the Beverage Association of SA (BevSA).

Phil Gutsche, chairperson of Coca-Cola Beverages Africa, said this was the most serious issue that had hit the industry since 1953.

“This is an industry matter and it impacts on every member. Nationally, we support more than 200 000 jobs. If this tax proceeds, we stand to lose 60 000 jobs.

“More than 5 000 livelihoods will be affected in Nelson Mandela Bay alone,” Gutsche said, adding that the beverage industry’s contribution to the economy had increased much faster in real terms since 2008.

He cited a 258% rise compared with the country’s overall GDP, which grew 43% over the same period.

Gutsche said many people would be affected, including employees, sugar suppliers, bottlers, and those selling soft drinks in spaza shops and supermarkets.

He said in Nelson Mandela Bay alone, Coca-Cola provided direct employment to 670 people.

Calling the proposed 20% increase on the retail price “exorbitant”, Gutsche said black women, who run the spazas in townships, would be most affected.

“Our company in the Bay metro trains thousands of these women, who have learnt about skills development and entrepreneurship.”

He said Coca-Cola made an R800 million commitment to the South African government to develop a programme targeted at small, medium and micro-sized enterprises – R400 million of which would be allocated for the development of mostly emerging sugar farmers.

“Can you imagine us training someone to be a sugar farmer, and then telling them that now we are out of business? This tax will definitely undermine our commitment,” he said.

In a veiled threat to the government, Gutsche said Coca-Cola Beverages Africa could not be expected to maintain its headquarters in the country.

He dismissed suggestions that a major reason for this tax was to combat South Africa’s rapidly growing obesity rate. “Obese people are not [part of] our market. They do not drink our products. Maybe they do a little bit, but it is the way they eat. So I question the health reasons.”

Little Green Beverages director Glenn Sheppard said the company would have to reconsider a significant investment in its Buffalo City plant in East London.

Twizza financial director Nico de Jager said that even in a small town such as Queenstown – its operational headquarters – the proposed tax could wreak havoc and lead to the loss of 815 jobs.

Mapule Ncanywa, executive director of BevSA, said the beverage industry was committed to the country’s economy as it planned to invest in 30 000 new outlets and create 60 000 jobs over the next five years.

She said 97% of South Africa’s obesity problems had nothing to do with sugar-sweetened beverages as they accounted for just 3% of the daily kilojoule intake.

“Voluntary reformulation, packaging, labelling and other targeted commitments will have a greater impact on tackling obesity than the anticipated reduction of only 37 kilojoules a day because of a tax,” she said.

July 21 2019