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‘Punitive’ tax could cause job losses, Coca-Cola says

MBONGENI MGUNI
National sweet-tooth: The sugar tax starts in April PIC: FITNESS HOLISTIC.COM
The country’s largest producer of sugary drinks, Coca-Cola Beverages Botswana (CCBB), says the upcoming sugar tax is punitive and places a ‘disproportionate and discriminatory’ burden on one sector in the process of making a corrective health action.

This week, the beverage giant told BusinessWeek the sugar tax, which takes effect on April 1, could lead to job losses locally and curtail investment and employment creation.

Finance and Economic Development minister, Thapelo Matsheka announced the new tax in his recent budget speech saying it would contribute to local tax revenue while helping fight obesity in the country. From April 1, a levy of two thebe per gram of sugar above the content of four grammes of sugar per 100 millilitres will be applied on sweetened beverages.

“It is with great concern that Coca-Cola Beverages Botswana notes the proposed taxation of sugar-sweetened beverages,” the group told BusinessWeek in an emailed response.

“While we recognise and actively support global efforts to reduce the impact of non-communicable diseases such as obesity, we do not believe that punitive taxation is effective in achieving the desired behaviour outcomes among consumers.  Furthermore, we are concerned that the targeted taxation of sugar-sweetened beverages places a disproportionate and discriminatory burden on one sector to facilitate corrective action. “The intended health outcomes can be achieved by collaborative efforts among social partners.”

The beverage giant said the new tax would have unintended economic consequences that would negatively impact employment and overall tax collection. “Several independent studies have shown an adverse impact on especially small businesses as a result of sugar tax at a time of extreme economic impacts from coronavirus (COVID-19) on consumers and businesses. “The economic impact, including job losses, will have a direct impact on the beverage industry value chain, which coupled with the impact of COVID-19, will result in reduced economic growth for industry and Botswana,” the group said.

It continued: “This includes our ability to invest in the

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vital areas of enterprise development and employment creation initiatives in our communities and our value chain.”

CCBB general manager, David Chait said a more effective solution could be achieved through a holistic, consultative approach.

“We are firmly against discriminatory and punitive tax regimes. There is much that we have already initiated as part of the Coca-Cola system and we remain committed to engaging government in formulating a workable solution,” he said.

Government first hinted at the sugar tax in November 2018, when President Mokgweetsi Masisi, in his maiden State of the Nation Address, said sugar-sweetened products, especially beverages were among the contributing factors to the high prevalence of obesity in the country. Documents from the Finance Ministry indicate that government expects it could raise between P150 million to P200 million from the sugar tax, in a year in which strenuous efforts are being made to collect every thebe due to the tax inspector to help budget revenues. CCBB, meanwhile, said an active process to reduce sugar content and change recipes across the region was underway as part of the group’s global health commitments.

Previously, CCBB executives told BusinessWeek the group was strategising for the inevitable introduction of the sugar tax in Botswana.

“We will be doing a lot of things to support the objectives of what that tax wants to achieve.

“These include alternative products, reformulation of drinks, reducing the sugar content, smaller packs and others. “In this market, there’s a lot of strategies to try and achieve the same objectives that the government is looking for.

“For example, you can aim for less sugar in a 100-millilitre product, but have the same taste,” an executive told BusinessWeek shortly after Masisi’s November 2018 comments.



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