Many African countries, including SA, could make greater use of taxes on tobacco, booze and soft drinks to curb consumption and thus reduce illness and premature death, argues a new report co-authored by University of Cape Town (UCT) academics.
African governments are grappling with sharply reduced healthcare funding in the wake of US President Donald Trump’s abrupt cuts to foreign aid and diminished overseas assistance from European countries intent on ramping up defence spending.
Taxes on tobacco, alcohol, sugary drinks and ultraprocessed food offer a way to raise finances while reducing consumption of these products and their associated healthcare costs, yet are often underutilised, according to a report by Vital Strategies, Economics for Health and UCT’s Research Unit on the Economics of Excisable Products (Reep) released on Tuesday.
The report comes as countries negotiate a political declaration that will be adopted at the UN high-level meeting on noncommunicable diseases (NCD) in New York in September. Public health advocates would like to see it include a firm commitment to implement health taxes.
The nonprofit NCD Alliance has accused governments of bowing to industry pressure, and said on Friday that the text of the draft declaration had been watered down so that governments would agree to consider, rather than enact, such taxes.
Reep director Corné van Walbeek said SA could extract more benefit from its excise tax regime for unhealthy products, in tax design and enforcement.
For example, the health impact of the excise tax on wine could be improved if the National Treasury implemented its proposal to introduce a regimen based on alcohol content instead of the current per-litre pricing system, said Van Walbeek. This would create an incentive for wine producers to reduce the alcohol content of their wine, he said.
SA already applies excise taxes to beer-based alcoholic content, making it one of only three African countries to do so, according to the report. The other two countries are Namibia and Equatorial Guinea. Yet, the overall tax on beer in SA is low, resulting in prices that are among the lowest in Africa and that contribute to high consumption, the report reads.
Only about 30% of Africans drink alcohol, but those who do are among the world’s heaviest boozers, according to the report. It notes that binge-drinking is particularly severe in SA, where 59% of drinkers report heavy drinking episodes in which they consume five or more drinks.
On the tobacco front, the illicit trade in cigarettes is undermining the impact of excise taxes on consumption, said Van Walbeek. Reep researchers have previously estimated that more than half the cigarettes sold in SA are produced by companies that are not paying excise tax, and can thus undercut the prices of the cigarettes marketed by tax-compliant companies.
“The illicit trade remains stubbornly high. It is a significant failure of government and an indictment of the tobacco industry,” he said.
The excise tax on the most-sold brand of cigarettes in SA in 2024 was 45.7%, comparing favourable with the median tax component of the price of tobacco products sold in Africa of 41%, shows the report. The figure is highest in Mauritius, at 64.8%.
There are about 60-million tobacco users in Africa and tobacco accounts for about 200,000 deaths a year on the continent, according to the World Health Organisation.
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