Health experts call for a 20% hike in sugar tax

Health specialists want the treasury to increase the health promotion levy to 20%. This call comes ahead of Finance Minister Tito Mboweni’s presentation of the annual budget on 24 February. 

The health promotion levy, which was first introduced in April 2018, is a sugar-sweetened beverage tax, is currently 11%.  

Speaking on Tuesday at a webinar run by the nonprofit organisation, Healthy Living Alliance (Heala), the specialists said it would be prudent to increase the levy now, because the health sector is battling with the Covid-19 pandemic. 

Karen Hofman, director of the Wits Centre for Health Economics and Decision Science (Priceless SA), said most people admitted to hospital with Covid-19 have comorbidities such as diabetes and hypertension. She said research has shown that sugar, particularly in liquid form, increases the risk of obesity, diabetes, hypertension, cardiovascular disease, many common cancers and dental decay. 

Hofman added that the country could have been in a much better position if those comorbidities had been prevented. 

Data released by Medscheme in January showed that of the people who died of Covid-19, 25% had no comorbidities while 60% had two to four comorbidities. 

Commenting on eating habits that cause illnesses, Hofman said people think they have “control over what [they] are eating and drinking”, but they don’t. “You have been told from an early age by your environment on what to buy, what to consume and what to eat.”  

The health specialists want the tax to be increased to 20%, based on the World Health Organisation and other health experts’ recommendations for it to have any benefit. 

The head of Heala, Lawrence Mbalati, said the sugar tax had generated R5.4-billion for the government within its first two years. In 2018, it generated R3.2-billion.

Mbalati said this would have been enough to finance South Africa’s downpayment for Covid-19 vaccines from the Covax facility almost 20 times over, despite the health promotion tax’s relatively small contribution to the government’s overall budget. 

“If the treasury doubled the health promotion levy now, it could net the government around R2-billion to help fund the fight against Covid-19 in the short term,” he said, adding that these estimates are based on current sugar consumption levels and the revenue raised by the levy.

“This is a watershed moment for the country,” Mbalati said. “Government revenues are under immense pressure and funding the fight against Covid-19, including vaccines, remains critical.”

Helela’s initial research has shown that “prices increased commensurate with the tax for taxed beverages but did not change for non-taxable beverages and reduced consumption”.

Hofman said South Africa is facing a double burden of disease: high rates of obesity and noncommunicable diseases such as type 2 diabetes and cardiovascular diseases caused by unhealthy diets, contributing to a population at greater risk for complications from Covid-19.

She said that based on the experience of countries that have a levy on sugar — Mexico, Chile and France — a tax in South Africa can help dampen demand for sugary drinks and shift direction to healthier alternatives junk foods. 

Hofman said their research has shown that nationally, urban households’ purchases of taxable beverages by volume fell by 51% and there was a 29% decrease in sugar intake. 

In Soweto, the frequency of sugar-sweetened beverage intake among  teenagers, young and older adults fell from 10 beverages a week before the levy to four drinks a week one year after the levy. 

“SA must address commercially driven epidemics with taxes, mandatory food labelling and mandatory comprehensive marketing bans,” Hofman said.
Michael Sachs, adjunct professor at the University of the Witwatersrand and the former head of the treasury’s budget office, said that design matters when implementing taxes. “It’s not only about the changing of consumers; it’s about changing behaviours of industry  and reformulating products.”

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Tshegofatso Mathe
Tshegofatso Mathe
Tshegofatso Mathe is a financial trainee journalist at the Mail & Guardian.

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