By not increasing the levy on health promotion, the Treasury Department will fail on the poorest, most affected by non-communicable diseases, says an activist. (Photo by Matthew Horwood / Getty Images)
Not a word about the health promotion tax in the business-friendly budget of Finance Minister Tito Mboweni for 2021. And while the alcohol and tobacco industry lamented the 8% increase in excise tax, the levy remains at just 11% – well below the World Health Organization’s recommendation of 20%.
The minister’s failure to increase the Health Promotion Levy (HPL), also known as the sugary beverage tax, has been criticized by health activists as the poorest in South Africa are hardest hit by the government’s liberal stance on the sugar industry. But Mboweni’s approach to alcohol and tobacco received praise from unexpected quarters.
The HPL, which is collected for non-alcoholic sugary drinks but not for fruit juices or other sweetened drinks, has been 11% since it was introduced in 2018. The first 100 ml of a sugary drink are excluded. After that, it is charged at a rate of 2.2 c / g sugar. In the case of a 355 ml fizzy drink containing sugar, the tax increases the price by around 46 cents. Over the years the tax has been undermined in real terms and health advocates have called for it to be brought in line with WHO recommendations.
The levy is intended to curb the sugar consumption that fuels what Health Minister Zweli Mkhize called a “tsunami” of non-communicable diseases such as diabetes, high blood pressure and obesity before the Covid-19 lockdown.
Lawrence Mbalati, program manager for the Healthy Living Alliance (Heala), said this week the alliance was discouraged by the announcementDuring a pandemic, health care and health promotion should be a top priority for any government. He said the levy had already been increased for three years and the Treasury Department had failed the poorest, hardest hit by non-communicable diseases (NCDs).
In the first two years, the levy generated R 5.4 billion for the country, which, according to Heala, would have been enough in the short term to finance the introduction of the South African Covid-19 vaccine “almost 20 times”. In the long term, the health effects would translate into fewer NCDs and less stress on the health system.
Mbalati said that poor and low-income households are a “growing market” for soft drink companies and that numerous studies have linked regular consumption of sugary beverages to an increased risk of type 2 diabetes, obesity, heart disease and other noncommunicable diseases .
But health taxes are working, he said: In a study done in the first year of the tax’s introduction, researchers found a 60% reduction sugary drink consumption among heavy users of sugary beverages in Soweto. Another study in Langa, Cape Town found that adults between 18 and 39 years of age reduced their total sugar intake by almost a third after the tax was introduced.
Says Mbalati, “Our people struggle with obesity and diet-related diseases because they exist in an unhealthy food environment. You are exposed to an influx of unhealthy ultra-processed foods that are high in salt, saturated fat, and sugar. We need policies that protect them.
“For example, there is evidence that the health promotion tax is an effective way to reduce the purchase of sugary beverages and, in the long term, lower the prevalence of obesity and NCDs. For this reason, our alliance of committed civil society continues to advocate such a policy – to make the food environment healthier, so that our people have access to healthy food. “
Dr. Sharon Nyatsanza, project and communications manager at the National Council Against Smoking, says she applauds the government for ignoring calls for a 0% increase and found the tone refreshing for health. However, the 8% increase in excise duty was still far too small and was equivalent to R1 1.39 per pack of 20.
“It was higher than 2020 when it increased by 74c, or 4.4%, but it doesn’t make the product any less affordable. In particular, it has no influence on behavior. It does not prevent non-users from using the product either. “
The Treasury Department also promised to start taxing vaping products in 2020, but has not yet done so.
“There will be a newspaper out soon,” she says.
“These vaping products are harmful and must be taxed. There are over 500 brands – it’s very complicated, but they need to be regulated. “
However, Maurice Smithers of the Southern African Alcohol Policy Alliance (SAAPA) said they were “pleasantly surprised” that alcohol and tobacco had increased.
“The Treasury only increased it by 4.4% last year. And they have come under heavy pressure from the liquor industry not to increase them at all due to Covid-19. The government is also facing two lawsuits, SAB and Vinpro, and we thought they could strategically decide on a very small increase, if any. ”
Echoing the feelings of Professor Corné van Walbeek Smithers, of UCT’s School of Economics, said the real cost of alcohol had decreased since the 1960s and the excise tax should be increased significantly to bring it in line.
“In 1966 the excise tax on one liter of pure alcohol was R250 – 2016 in monetary terms. In 2018, the excise duty was R 80 per liter – a third of the mid-60s. It’s gone down, so if you factor in inflation, the price of alcohol has gone down. “
Smithers said the excise tax – which targets products that harm society such as alcohol, tobacco, sugar and fuel – should increase over time to make up for the deficit and encourage less consumption, but it doesn’t achieve its goal .
SAAPA has been busy lobbying and Smithers says there are indications that the Treasury Department is “starting to listen”.
It is remarkable in the changing discourse: In the past few years the ministry would have joked about a “sin tax” that implied moral judgment and punishment, while this year there was no such reference.
“We said you shouldn’t apologize for the health promotion tax hike – it’s for the common good. This year Mboweni actually said that alcohol has been shown to be harmful and that people are sensitive to price increases and drink less when prices go up. That was great and a big change. ”
Regarding former President Thabo Mbeki’s pipe smoking habit, there was a “smallanyana” joke about pipe tobacco, but the way Mboweni phrased the tax was “really good.”
The next step, Smithers said, should be for them to label it a health tax, geared towards promoting public health.
And the government had to turn away from its opposition to capping certain taxes – they should be allocated to a health promotion development fund and used to fund capacity through various programs promoting healthy and safe behavior. MC / DM