Sugary drinks are a killer: 20% tax increase would save lives
- Susan Goldstein
A sugar-sweetened beverage tax is effective in reducing sugar consumption and should be increased for health reasons, researchers argue.
Non-communicable diseases such as diabetes, hypertension and cardiovascular conditions account for over .
In South Africa, . Diabetes ranks as the second leading cause after tuberculosis.
to rising diabetes rates is the high consumption of sugar-sweetened beverages, including cooldrinks.
The World Health Organization on sugary drinks as an effective tool to help reduce consumption and curb related health risks.
South Africa introduced a tax on sugar-sweetened beverages, officially known as the , in 2018.
The tax applies at R0.0221 ($0.0012) per gram of sugar beyond a 4g/100ml threshold, amounting to an 8% of final selling price. The tax has increased slightly since it was introduced, but not in line with inflation. The Health Promotion Levy therefore falls short of the original 20% target as industry pressure led to a watered-down version of it.
I lead the , which has been studying various aspects of the levy for over 10 years.
PRICELESS SA is still in the process of measuring the health and financial impact of not implementing the Health Promotion Levy at the recommended 20%. A lack of recent data adds to this challenge. But it is worth noting that the shows that obesity is still a severe problem in South Africa.
Without interventions, obesity in South Africa is projected to affect 30 million adults and . In 2019 there were 55,238 deaths in South Africa from non-communicable diseases attributable to obesity, and with an annual in obesity, deaths are going to increase.
Taxing sugary beverages is effective
Despite the sugar industry’s claims that the Health Promotion Levy is , global evidence strongly suggests otherwise. Countries that have implemented such taxes have seen significant declines in sugar consumption.
Sugar-sweetened beverage taxes have been implemented in and have been shown to be effective in many countries.
In Ireland there was a through these beverages.
In California a study showed a living in cities where there was a sugary beverage tax.
In Mexico, a sugar-sweetened beverages tax at 1 peso ($0.05) per litre was introduced in 2014, and by 2016, sugary drinks sales had .
Similarly, in the UK, a tax introduced in 2018 led to a in sugar consumption from taxed beverages.
The levy has had a positive impact in South Africa. Studies show of these beverages. There were greater reductions in sales among .
Mean sugar from taxable beverage purchases fell from 16.25 g/capita per day from the pre-health promotion levy announcement to 10.63 g/capita per day in the year after implementation.
Lower-income households, which initially purchased more taxable sugary beverages than wealthier households, in consumption after the tax was enforced.
This is particularly important as non-communicable diseases poor and vulnerable populations.
Stronger taxation on sugary beverages not only decreases consumption but also by manufacturers, leading to healthier products.
The levy does not cause job losses
Sugar-related industries that the tax has led to massive job losses.
Our research contradicts these claims.
A carried out by PRICELESS SA, funded by Bloomberg Philanthropies through the University of North Carolina and the South African Medical Research Council, showed no significant association between the levy and employment levels. It showed that the levy had not been associated with job creation or job losses in sugar-related industries. These include agriculture, beverage manufacturing and commercial enterprises that sell food and beverages.
The study suggests that may explain this:
Firstly, firms may reallocate labour within their operations rather than cut jobs.
Secondly, many beverage producers have responded to the tax by reformulating their products, reducing the sugar content and using non-nutritive sweeteners rather than reducing production.
Thirdly, demand for taxed sugary drinks has not declined enough to affect employment.
Finally, consumers often switch to untaxed alternatives produced by the same companies, preventing financial losses to the industry.
Increasing the levy is beneficial to the public purse
The recent of South Africa’s budget speech, due to disagreements within the government over the proposed value added tax increase of two percentage points, highlights the urgent need for additional and alternative revenue sources.
South Africa’s health system is experiencing a due to overweight and obesity, costing annually. This expense accounts for of the government’s health expenditure and of the country’s GDP. On a per-person basis, the annual cost of overweight and obesity is .
On the other hand, the levy generated in revenue over its first two fiscal years.
Beyond raising funds, a higher tax rate would provide public health benefits and savings for health services.
Based on our research, increasing the levy to 20% in South Africa could obesity rates by 2.4 to 3.8 percentage points, prevent 85,000 strokes, and save 72,000 lives over two decades.
These improvements potentially save over in medical costs.
Unlike other taxation measures, which affect all consumers equally, the levy primarily targets discretionary purchases, making it a fairer fiscal tool.
Therefore, government must act – raise the Health Promotion Levy to 20% and cut the sugar-fuelled health crisis at its root.
Raising the levy to 20% would be a smarter tax for a healthier nation.
Darshen Naidoo, Legal Researcher and Associate Lecturer at PRICELESS SA, 91心頭利, Johannesburg contributed to the article.
, Associate Professor in the SAMRC Centre for Health Economics and Decision Science - PRICELESS SA (Priority Cost Effective Lessons in Systems Strengthening South Africa),
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