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SA’s levy on sugar-sweetened drinks is having an impact – research

The reductions in sugar from taxable beverage purchases suggest a potential role for sugar-based taxes more broadly.
Image: Shutterstock

Three years ago South Africa introduced Africa’s first major tax on sugar-sweetened beverages based on grams of sugar. The tax now stands at about 11% of the price per litre.

We assessed the impact in recently published research. We found that the health promotion levy coincided with large reductions in purchases of taxable beverages, in terms of both volume and sugar quantities. We didn’t find significant changes for non-taxable beverages.

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This isn’t the first research to show positive outcomes from the levy. A national study one year after it was introduced found households in urban areas halved the volume of sugary beverages they bought, cutting their sugar intake by nearly a third. Similar results were found regionally in Soweto in Gauteng.

The new research is the first evaluate this particular tax design. At a national level, we measured changes in household purchases of taxable and non-taxable beverages in terms of volume, sugar and calories. We also assessed changes in the purchasing behaviour of households stratified by household socioeconomic status. We assessed changes between the period before the levy to after its announcement and through the first year of its implementation period.

Research shows that excess sugar, particularly in liquid form, is a major cause of obesity and is a risk factor for diseases like type 2 diabetes, hypertension, heart disease, many common cancers and tooth decay. Recognising this danger, the World Health Organisation (WHO) has recommended that individuals should consume no more than 10% of total calories from added sugar, and preferably less than 5%.

Carbonated sugary drinks play a major role in making these numbers hard to attain. A 250ml cooldrink contains upwards of 26g of sugar – more than half the daily recommended limit.

Sub-Saharan Africa faces a tidal wave of diet-related noncommunicable diseases, with rapidly rising intake of sugar-sweetened beverages and other ultra-processed foods. South Africa, in particular, has a heavy burden of these noncommunicable diseases.

While other countries in sub-Saharan Africa have levied sugar-sweetened beverage taxes, South Africa is the first country in the region to evaluate such a policy.

Our results clearly show positive changes that could offer useful public health gains across the region. The reductions in sugar from taxable beverage purchases suggest a potential role for sugar-based taxes more broadly.

To tax, or not to tax

More than 50 jurisdictions across the globe have used taxes to curb the consumption of sugar-sweetened beverages.

For example, in 2014, Mexico introduced a tax of one peso per litre on beverages containing added sugar. Research has shown that it resulted in a 6% reduction in purchased volume relative to pre-tax trends over the first year of the tax, and a 7.6% reduction over the first two years of the tax.

Tax policies in other countries such as the UK and several subnational jurisdictions in the US have also resulted in statistically significant reductions in purchases of sugar-sweetened beverages.

South Africa has led the continent firstly by introducing the tax, and secondly by making the levy about sugar content rather than volume.

Given that sugar-sweetened drinks contain variations in sugar levels, taxing them according to their sugar content is a more precise way of targeting the source of these products’ harm. It also gives beverage manufacturers an incentive to reduce the sugar content of their products. This strategy formed the basis of South Africa’s 2018 tax policy.

Unfinished business

South Africa’s levy showed that in 2018 the country was prepared to put the health of the public in first place.

But the government has failed to capitalise on these early gains, despite the evidence that’s been presented to it about the impact of the levy on consumption patterns. An example of this is that it has not raised the rate at which the tax is imposed.

Health experts had been lobbying for an increase to 20% – the levy recommended by the WHO. No country in the world has reached this benchmark. Nations are only getting part of the benefits in terms of preventing obesity. This matters to the future health of children, in particular. South Africa has seen a rise in childhood obesity rates since 1994. And some forecasts suggest that the country will have the 10th highest level of childhood obesity in the world by 2030, affecting over 4 million children aged 5 to 19 years.

The campaign to get the levy increased is based on the growing body of research showing that sugar is addictive, that it is harmful to people’s health and that it is overwhelming the country’s health system.

Earlier this year the government made it clear that it had no intention of raising the 11% after the subject was left out of the February budget.

Yet, the country is paying a heavy cost to treat type 2 diabetes and hypertension.

Government has the power to make healthy choices the easy choice. Healthy food like fresh fruit and vegetables is often not available or affordable for many living in rural or urban areas. People eat what is available and cheap.

The government can save lives and reduce the numbers of people who develop diseases by taking three very simple steps.

Firstly, it needs clear regulations.

Secondly, it needs preventative strategies.

Thirdly, it needs watertight policies for reducing consumption of unhealthy foods.

Increasing the health promotion levy, introducing mandatory front of package labelling and banning the marketing of unhealthy products to children should be at the very top of the priority list.The Conversation

Karen Hofman, Professor and Programme Director, SA MRC Centre for Health Economics and Decision Science – PRICELESS SA (Priority Cost Effective Lessons in Systems Strengthening South Africa), University of the Witwatersrand

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Only country that did such an ‘evaluation’. Dont think the ANC did that because they care about our health,its more likely a financial feasabilty to start taxing my kids Smarties next.

The ANC’s care about the public’s health is best illustrated by Life Esedimedi.

And their desire to restrict access to vaccines for Covid by insisting on central control.

Not a bad idea….considering the global obesity problem – carrot and stick approach…..not good news however for Tongaat and Crookes locally or companies like Coca Cola globally. It is fair however to share this tax burden with everyone and not just the minority as per usual. Ultimately, I think we will be paying a tax on anything with water…so enjoy it now whilst you can!

So dear Doctor.

Pray tell us exactly how many deaths related to type 2 diabetes, hypertension, heart disease have been due solely to sugar intakes and graph to show the dramatic drop after this intervention.

Was there a third drop in totals directly due to the drop off in sales??

Also pry elaborate which cancers can be directly attributed to sugar !! I would presume that skin cancer is not one of them but I am very interested to see the list !!!

Dear Prof. This is all very sweet of you no pun intended. But isn’t he real reason for the consumption being less, the dreadful economic downturn. Sweets are a luxury so people have simply cut back? Would you actually know this?

As for healthy food, with 50% unemployment dont think that is a luxury reserved for people earning over R775k per month?

True story. But less money is only a part of it, there is another reason for less consumption of “sugar”. I new someone who was involved in the Beverage Industry at the time of these changes and what they did is reduce the volume of the servings and kept the price the same in that way their revenue remained the same, the taxes were accommodated but they were selling less litres. Coke and others probably made higher profits with less litres being sold. I do not see an article stating how Coke and others are taking a beating because of sugar taxes, NOT going to happen either.

A good example of this, older MW bloggers may remember going to the Wimpy in the eighties and you getting a large can of Coke (of which you were only allowed one), compare that to the airline cans you get now and the price has not dropped. These guys know their market and their business and more probably have much better Data than the WHO (WHO brought us the endless data stream for Covid and look how that turned out).

I think this is just another excuse to tax the middle classes further, I do not believe that the Govt cares that much about this and especially at the moment as there are a million other things to attend to at the moment.

Very good point; Suppliers to FMCG retail often reduce the volume/size offering but maintain the same price point. It’s an old trick to counter a price increase. Less for more.

More tax revenue forubcle Eddie not yet realised..allow me to propose a few low hanging fruit
1. Taxi tax, how hardcan i be Karen.
2. Nomvula,s Astin Martin , tax on this Karen
3. Rented schack tax, several indigents i konw (nice people) have rdp housing, they rent thier yards out to the max…Karen where are you tax?
4. Katel tax,when are the anc desperate enough to tax bed spring dynamics.

Like it or not, but research shows that the tax had a huge impact. I wonder about other factors such as the reduction in serving size (500ml to 440ml) and people having less disposable income.

Ya agree, the taxes did have an impact but not the way they intended (the people doing the study and Govt). It suggests that when you Tax someone you change their behaviour.

The study referred to states that “The announcement and introduction of South Africa’s HPL were followed by reductions in the sugar, calories, and volume of beverage purchases.” It does NOT say spending reduction in Rands, so the report is flawed.

All that happened when they reduced the serving volume is that the spend in ZAR remained the same. Ultimately the Beverage Manufacturer and SARS scored and we all drink less volume (and sugar) for the same price. Coke and the like did their research better than SARS and for them the bulk of consumers do not know any better. They also changed the volumes, why did they not leave it the same, I think for their good not ours.

There is also no mention of increased rand spend on sugary drinks. I think the better data exists with the large manufacturers (volume, calories, sugar versus Rand Sales) of these drinks and that enables them to make better decisions. Maybe they should publish their data.

The Nanny State strikes again. I am not a smoker, but many years ago, The Economist carried an article that smoking actually benefited the fiscus in Western countries. Smokers die earlier, thereby reducing the load on the taxpayer who don’t have to fund their pensions.

I am sorry, but going by the damned pollution, the only impact is people buying cheaper brands (that may or may not be paying the taxes).

I was hoping to see evidence of a causal link between taxes and better health outcomes. Unfortunately this article lacks this. Intuitively I doubt there is a link as people drinking fizzy drinks will continue to do so. Thus the tax is more akin to a sin-tax rather than trying to incentivise heathy behaviour. Prove me wrong with facts if you dare.

Possible to find the impact of better health outcomes in a selected group over time depending on the quality of your respondents…

but I think its difficult to track individuals and their consumption.
I think Discovery could pull this off….as they track their members behaviour

This study is based on the assumption that people who don’t take sugar either (a) will never die (which is improbable) or (b) will die of conditions or causes that cost the state nothing (which is only slightly less improbable).

The only impact being that all cooldrinks now taste like s###.

Yep, one of the reasons people buy less, together with less disposable income.

If the sugar levy could prevent diabetes, then a sex and mosquito tax offers the solution to overpopulation, unemployment, malnutrition, AIDS and malaria.

While they are at it, these micromanaging central planners may just as well take their planning a step further, and enforce mandatory birth control measures to decrease the population size to manage the cost of healthcare for the state.

The point is- when voters abdicate the responsibility for their health to the government, they abdicate their individual freedom and right to life at the same time. Lazy citizens with the slave mentality enable the omnipotent government with coercive powers to enslave them.

Oh so true.
The findings are based on assumptions. No clinical evidence is presented. Who can possibly link sugary drinks to any form of health problem? There are too many other factors.
1. What do governments globally use the taxes for? Is there any evidence that the revenue is used specifically for health purposes?
2. Carbon tax is a similar issue. What happens in south Africa? Is the revenue used by government to expand renewable energies?
3. For me all I see happening is the continual erosion of citizen rights. The UN dictates the global agenda. And nations sacrifice their sovereignty which means you and I are denied individual right to choice.

There are deeper issues in possible support of interventions such as this tax, but the inevitable result is bitter sweet.

I find myself not agreeing on this. Some wise man stated that if you want to reduce demand for anything — tax it! I believe that the evidence is clear that sugar is bad for everyone. The National Geographic had an article on this and recommended that one should not have more than 6 teaspoons of sugar a day. Check how many products have sugar in them. Rather tax sugar than beer!!

Nostra, I agree that sugar is detrimental to our health. Not even 1 tablespoon per week is acceptable. My point is that government has no place in the management of my personal choices and preferences. The government should protect my right to make my own choices and to bear the consequences of those choices. I haven’t used any table sugar in any form over the last 30 years, so the tax does not affect me at all. It is a matter of principle to me.

Trouble is those that don’t look after their health become our problem as our tax and other government resources are spent on them. At least the tax collected will go towards the problem created.

What is the likelihood that all of these countries that implemented sugar tax’s and carbon tax’s have loans with the IMF or World bank who are nervous about their loans being serviced.
As mentioned elsewhere, if this tax is having the desired result, show us the commensurate decline in sugar related illness. Come on Moneyweb, that would be real journalism, go and ask the right questions.

If the consumer knew what dangerous chemicals are being used to substitute sugar they wold never buy another cool drink. But hey, who cares as long as gov’t can initiate another tax stream.

Couldn’t agree with you more. I am 72 and been a Coke ‘addict’ since I was about 7 years old. At my annual medical checkup my sugar levels are on point. 500ml daily.
There is no blanket effect.
And artificial sweeteners are toxic.

May need to clear the room at your cremation of course

Cmon folks don’t be nasty, government provides more and more employment and services for the benefit of the general population. Since Karl Marx passed on, there is no justification to doubt their right to do this.

I just love how the assumption is that less sales of sugary drinks means people are healthier… Who’s to say that due to increase in price of sugary drinks and the economic downturn, that people aren’t turning to even more dangerous “fixes”?

The person writing this article is a Professor in Health Economics and Decision Science – I suspect she has done a bit of reading in the field. It is amazing how many armchair experts there are here who throw out their opinions and prejudice as facts. There is so much research linking sugar to obesity, obesity to diabetes, diabetes to a range of horrible medical problems and early death. The tax income is immaterial – its the behavioural change that matters.

So tax them to death and they will live longer and pay taxes longer. Now THERE’S A STRATEGY

This is a scam.
Nothing to do with health. Same with other ‘sin’ taxes – they can just be sold more easily to a gullible public than say a ‘veggies’ or ‘bottled water’ tax. Secondly, they know the addictive effects of these substances and so they know people will pay. Ironically, the taxes levied aren’t in any way utilized to help people overcome nicotine or alcohol addiction. That would be the only morally justifiable use for such ‘sin tax’.
It’s just more legalised theft by the SA Gangster State.

“South Africa has seen a rise in childhood obesity rates since 1994” – further proof of parental cader deployment theft, being able to afford the more expensive colonialist food. It is all in the numbers, stupid 🙂

Don’t think this has anything to do with health. Just another form of double taxation like the fuel levy.

End of comments.

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