The Rural Health Advocacy Project (RHAP) is spearheading a campaign for increased taxes on sugary drinks, alcohol and tobacco products, saying the Treasury could do more to help curb consumption of these products.
Each of these taxes has been the subject of intense lobbying, with proponents arguing they help cut consumption of harmful products and reduce the burden on the health system, while critics maintain they harm the economy.
RHAP launched an alliance of health tax advocates last week that includes health activists and academics, including the Medical Research Council/Wits Centre for Health Economics and Decision Science (Priceless SA) and UCT’s Research Unit on the Economics of Excisable Products (Reep).
“Our goal here is for a deeper consideration of these taxes, and for them to be more commensurate with the harm they cause,” said RHAP director Russell Rensburg. Only R9bn was generated for the fiscus from the excise tax on tobacco products each year, yet tobacco-related diseases cost SA’s public health system an estimated R52bn a year, he said.
A packet of 20 cigarettes now carries an excise tax of R21.77, up from R20.20 last year. The guideline excise taxes on wine, beer and spirits are 11%, 23% and 36% of the respective weighted average retail price. The tax on sugar-sweetened beverages, known as the health promotion levy, is set at 2.1c per gram of sugar per 100ml liquid, above a 4g threshold. The health promotion levy, dubbed the “sugar tax” is equivalent to about 11% of the retail price.
The Treasury has previously said the primary purpose of these taxes is to curb consumption rather than generate revenue, and the taxes are not ring-fenced for the health budget.
It is under pressure from supporters and critics of the taxes hoping for changes to be announced in the medium-term budget policy statement, due to be tabled in parliament next week by finance minister Enoch Godongwana.
Reep told a symposium hosted by RHAP last week that there was “overwhelming evidence” from global health authorities that increasing the excise tax on tobacco products was the single most effective policy intervention to reduce consumption.
The World Health Organisation recommends a 75% excise tax target, far higher than SA’s current 40% target, it said. Reep advocated a 5% increase in the excise tax on tobacco products in next year’s budget, and called for an increase in the excise tax on beer.
The Healthy Living Alliance (Heala) is pushing for the sugar tax to be both increased and widened to include fruit juice. It is being opposed by SA Canegrowers, which says more jobs will be lost if the tax is strengthened.
SA Canegrowers represents 24,000 small-scale growers and 1,200 commercial farms. It released a statement on Monday challenging Heala’s assertion that there were no job losses in the sugar sector after the tax was introduced in 2018.
SA Canegrowers has consistently said the introduction of the health levy led to the loss of 16,000 jobs, citing a Nedlac study. It previously told Business Day that its own annual surveys had come to a similar conclusions.
“Additionally, Heala’s narrow focus on sugar as a cause of serious health problems overlooks the wider range of factors affecting public health, including high-stress environments, violence, lack of exercise, excessive intake of fatty foods, malnutrition, and inadequate access to varied diets and protein from sources like meat, beans and eggs,” SA Canegrowers said in a statement.
“Focusing solely on sugar as the cause of many of SA’s health problems is an overly simplistic approach that ignores the complexities of nutrition and life in the country,” it said.
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