Blog 7 Feb 2017 – Joint meeting with SC: Finance and PC: Health on the proposed sugar tax held o 31 January 2017

The Minister of Finance last year announced that there will be a tax on sugar sweetened beverages. National Treasury published its Policy Paper on Taxation of Sugar Sweetened Beverages in July 2016 inviting comments from the public. The Minister will make a statement regarding the proposed tax during the Budget Speech in February 2017. Thereafter, the tax is envisaged to be legislated through an amendment to the Customs and Excise Act. The Minister will then table or refer a money bill (amendment bill) to Parliament. This is likely to be referred to the Standing Committee on Finance for processing in June 2017. The committee will then hold public hearings on the bill.

Our Constitution obliges Parliament to consult with the public, particularly when processing legislation and our Constitutional Court has held that such consultation must be meaningful. However, the Constitutional Court did not define what it meant by meaningful. Although there is technically no bill before Parliament, the Standing Committee on Finance  recently (31 January 2017) called for a joint meeting with the Portfolio Committee on Health to familiarise themselves with the issues around the proposed tax, as nothing prevents the committee from proactively engaging on the proposed tax. The Chairperson emphasised that no decisions could be taken in the meeting held on 31 January. This proactive stance of the committee, in my view, is an indication that future discussions and consultations will be robust.

Once the bill is referred to the committee, it plans to spend several hours discussing the proposed sugar tax. This should include briefings from National Treasury and the Department of Health; public hearings (the number of which would depend on the interest shown); deliberations and voting.  

In any legislative scenario, there are winners and losers. I would venture to say that the winners would be Government seeking to implement a tax that they believe will change behaviour towards the foods we, as citizens, consume. It was emphasised that the burden of disease, due to unhealthy diets, is enormous on the state.  There will also be increased revenue, estimated at six billion rand. An MP suggested that the revenue be ring-fenced for research and health promotion. This will show that Government is not only raising taxes for the sake of obtaining more revenue.

Losers will be the sugar industry. On a presentation slide, the infamous Coke can was placed next to tobacco and alcohol. I’m sure the sugar industry cringed at the thought of this. It was pointed out that the proposed tax will lead to job losses. Based on the comments made by MPs, I would venture to say that the sugar industry needs to increase its lobbying efforts if they wish to walk away with some wins or at least to soften the blow of the proposed tax and future regulatory interventions.

Comments from MPs varied. Whilst a stakeholder presenting in support of the proposed tax, emphasised the harm caused by sugar, an MP from the Finance committee interjected “criminalise it”. Overall, MPs from the Finance committee made comments around a more holistic approach that includes not only tax but also regulations and health promotion. Concerns were also raised on how the poor will be impacted. The official from National Treasury conceded to a holistic approach and noted that this is only the start. MPs from the Portfolio Committee on Health were biased towards health objectives.

The committee will hold several public hearings on the sugar tax and will have to make difficult decisions regarding the health versus trade arguments. The Standing Committee on Finance is known for its robust and thorough approach to public hearings it holds. Therefore, I’m optimistic that consultation is likely to be meaningful. Of course, we cannot expect the committee to hold public hearings to infinity or that proposed laws are held captive by unending consultation.

I would like to see how the committee conveys reasons for its decisions. Is the preamble of a bill a sufficient method to convey reasons for a legislative measure? Is a press briefing sufficient to convey reasons for the measure?  Is the debate in the National Assembly and National Council of Provinces a sufficient method to provide reasons for a bill?  Or should stakeholders that commented on the bill be informed via correspondence as to why or why not their comments were or were not included in a bill? Perhaps all these measures should be employed. How this is done will ensure transparency and accountability, which are the pillars of our democracy.