South Africa is less than two weeks away from implementing the hard-won tax on sugary drinks. Health Minister Aaron Motsoaledi said now that “we’ve got a foot in the door” he will strengthen the government’s fight against the negative health impacts of sugar, writes Health-e News.
“We’ve started small with an 11% tax and there was strong push-back. We accept that but now we’ve got a foot in the door, we’re not going to stop there,” Motsoaledi is quoted in the report as saying. “We are going to increase it, there is no question about it. At least I will not stop there; I am going to push later on.”
In December, after 18 months of negotiations that included four parliamentary hearings and extensive debates in the National Economic Development and Labour Council (Nedlac), parliament passed an 11% tax on sugary beverages, termed the health promotion levy, due to be implemented on 1 April 2018. Along with bringing much-need revenue to the fiscus, the tax is intended to incentivise the public to consume less sugar in the form of liquid calories, a major contributor of soaring rates of diabetes, obesity and other health conditions like hypertension and certain cancers.
The Health Department is concerned about its ability to finance the health impacts of South Africa’s growing obesity epidemic. According to the latest South African Demographic and Health Survey, more than two thirds of local women are either overweight or obese, placing them at a high risk of developing a myriad of chronic diseases.
But, the report says, the level of the tax disappointed a number of academics and activists who were advocating for a 20% tax, which research has found would have a much more significant impact on lowering consumption and improving people’s health.
A modelling study conducted by the research body based at the School of Public Health, faculty of health sciences, University of the Witwatersrand, Priority Cost Effective Lessons for Systems Strengthening South Africa (PRICELESS), predicted the potential health impact of a stronger tax.
Using an indicator of “years of life gained due to avoided premature mortality”, said Nick Stacey, the current tax is predicted to result in a gain of over 300,000 life years over a 30-year period. But a 20% tax could double this: resulting in 688,719 life years gained, according to the study.
Although the “tax is a necessary first step” in reducing sugar consumption and improving health, “the tax on its own” will not necessarily have the impact needed to address South Africa’s obesity crisis, according to the Rural Health Advocacy Project’s Russell van Rensburg. “We need to also work towards ring-fencing the money gained from the tax for broader health education and health promotion programmes which will be essential for changing people’s consumption behaviour,” he said.
The report says while Treasury has a policy of not ring-fencing taxes, they have made some financial provision for health promotion campaigns to compliment the introduction of the tax. In Treasury’s national budget, published in February, an amount of R368m was allocated over the next three years “to begin a public awareness campaign to complement the health promotion levy on sugary beverages and to establish a health technology assessment unit”. But this amount is only a fraction of the revenue Treasury anticipates collecting from the tax: R1.93bn.
The report says it is also unclear just how much of this will be used for public campaigns around sugar and how much will be set aside for the health technology assessment unit, a body that will “analyse the cost effectiveness of various health interventions”. Popo Maja, head of communications at the National Health Department, said that he is unable to provide this budgetary breakdown at this stage and that the details will only be released during Motsoaledi’s budget speech on 13 May.
But he said the campaign would use mass media adverts, including on television and radio, to talk “specifically about sugar and the role it plays in diseases like diabetes and also the impact it has on obesity”.
But increasing the tax will not be easy, conceded Motsoaledi, due to the heavy lobbying by big business experienced in negotiations for the current levy, which he expects will continue alongside any future efforts to push for a stronger tax or any other policies against sugary beverages. “We are interfering with commercial entities which are very powerful,” he said.
The report says he compared the “fight” to legislate around sugar to that of tobacco. Big business is able to fight against increasing taxes on tobacco even when, he said, “it is agreed that smoking is one of the most dangerous and useless past-times humanity has ever been involved in”.
“There is no evidence anywhere that cigarettes contributed anything to the development of humanity but there is ample evidence that they have actually retarded the development of human beings because of the number of health problems they have caused and the amount of resources used to deal with those,” he said. “But still the cigarette companies fight back, mobilise and find allies including workers.”
Referring to the claims made by industry that the tax would impact on jobs and the economy, Motsoaledi said that the “link between health and economic growth is not up for discussion”. “You cannot dream of growing your economy without good health,” he said.
Despite the anticipated push-back from industry, Motsoaledi said banning fizzy drinks at government events is not “far off”. “What wisdom does it show for sugary drinks to be available at parliamentary events when this sugar tax was passed by parliament?” he asked. “Even when you go to an event organised by the Health Department you will find all these fizzy drinks – it’s embarrassing.”
He said “we are going to have to abolish them” in the same way alcohol was banned at government events.
“People have gotten used to no alcohol and will get used to no sugary drinks. So, it’s not far off – at least, I am going to push for it because the alternative is too ghastly to contemplate.”
Introduction Excise taxes are policy tools that have been applied internationally with some success to reduce consumption of products adversely impacting population health including tobacco, alcohol and increasingly junk foods and sugary beverages. As in other low-income and middle-income countries, South Africa faces a growing burden of lifestyle diseases; accordingly we simulate the impact of multiple excise tax interventions in this setting.
Methods We construct a mathematical model to simulate the health and revenue effects of increased excise taxes, which is adaptable to a variety of settings given its limited data requirements. Applying the model to South Africa, we simulate the impact of increased tax rates on tobacco and beer and of the introduction of a tax on sugar-sweetened beverages (SSB). Drawing on surveys of product usage and risk factor prevalence, the model uses a potential impact fraction to simulate the health effects of tax interventions.
Results Adopting an excise rate of 60% on tobacco would result in a gain of 858 923 life-years (95% uncertainty interval (UI) 480 188 to 1 310 329), while adopting an excise rate of 25% on beer would result in a gain of 568 063 life-years (95% UI 412 110 to 775 560) and the adoption of a 20% tax on SSBs would result in a gain of 688 719 life-years (95% UI 321 788 to 1 079 653).
Conclusion More aggressive excise tax policies on tobacco, beer and SSBs in South Africa could result in meaningful improvements in population health and raised revenue.
Nicholas Stacey, Amit Summan, Aviva Tugendhaft, Ramanan Laxminarayan, Karen Hoffman
[link url="https://www.health-e.org.za/2018/03/19/sugar-tax-the-fight-against-sugar-is-just-beginning/"]Health-e News report[/link]
[link url="http://gh.bmj.com/content/3/1/e000568"]BMJ Global Health abstract[/link]