Before purchasing a sugar sweetened beverage (SSB), spare one thought for the health consequences and another for your wallet. Late 2017 is likely to see the introduction of a new tax in South Africa in the form of a health promotion levy (or sugar tax).
Empirical evidence suggests that the quality of human health has declined drastically in the twenty first century. Governments across the globe are taking proactive measures in an attempt to alleviate the impact of unhealthy lifestyle choices. Government’s concern stems from the nexus between an individual’s health and the economy – an unhealthy population will result in unwanted economic consequences.
South Africa is not the first country to pursue a sugar tax. Denmark, Finland, France, Hungary, Ireland, Mexico and Norway have already imposed such a levy. Celebrity chef Jamie Oliver, a proponent of sugar tax, has initiated several campaigns to promote the implementation of a sugar tax in the United Kingdom.
The Department of Health and National Treasury have opted to impose a tax on SSBs as a disincentive for unhealthy choices by decreasing the affordability of these beverages. Globally these taxes have been recognised as an effective complementary tool in the fight against declining health. The taxes have been seen to influence consumer behaviour.
The proposed tax is expected to cost those with a sweet tooth an additional 2.1 c/g of sugar contained in SSBs. Some beverages will be excluded. For example beverages with intrinsic sugars such as milk and fruit juices will not be subject to the levy. The manner of imposing the levy is yet to be determined; currently the proposed options are: a flat levy, levy per gram or a threshold approach.
Sugar tax alone will not provide a solution to the health crisis and will only ever constitute part of a broader strategy. Critics of the sugar tax have advocated for the use of alternate measures to reduce the consumption of sweetened beverages. There has been a call for industry to reformulate the products they produce to contain less sugar, thus decreasing the availability of products with a high sugar content. A further suggestion is the promotion of tax-free healthy drinks. Further criticism has been raised around the socio-economic impact of a sugar tax. Instead of a tax forcing consumers to choose healthier options, an increase in the cost of sugar products due to a tax may lead consumers to choose cheaper, inferior goods or higher calorie alternatives. There is also a suggestion that the introduction of a sugar tax will lead to job losses due to a decline in sales volumes.
The tax collected from those who indulge in SSBs will go towards the general fiscus. It will not be ring-fenced for the promotion of interventions as part of the fight against non-communicable diseases or health-related education. It has been suggested that this too is a failure of the currently proposed legislation.
Many questions raised remain unanswered, pending the finalisation of the legislation. The answers will unfold once the implementation of the sugar tax becomes a reality. Further work is required to finalise the regulations around the levy prior to implementation. In the meantime, those with a sweet tooth can enjoy their indulgence, levy free, for a little while longer.