sugary drinks tax

A year of sugary drinks tax

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The Healthy Living Alliance shares their view on the latest sugary drinks tax.

A year of the health promotion levy

The 1st April 2019 marked a year since the introduction of the sugary drinks tax, also known as the health promotion levy. The 11% tax was implemented as a means to mitigate the rising and shocking rates of obesity and non-communicable diseases (NCDs) in the country.

Revenue generated from the health promotion levy is set to fund health promotion and NCD programmes. National Treasury Spokesperson Jabulane Mulambo said: “By the end of January 2019, the health promotion levy had raised R2, 715 million. The revenue numbers for February 2019 are still to be verified and will be published before end of March, and the full financial results will only become available after the close of financial year – sometime in April.”

According to the National Department of Health a portion of the revenue has already been invested in cancer research.

The levy, which is applied to all non-alcoholic drinks with added sugar or flavouring, syrups and other concentrates, cocoa powder and malt extract, and non-alcoholic beer is a step in the right direction in fighting the scourge of obesity in the South Africa.

But this is not enough

While HEALA considers the implementation of the 11% levy on sugary drinks a year ago a milestone for country, we will continue to advocate for an increase to 20% in order for the levy to have a significant impact as recommended by the World Health Organisation (WHO).

A 20% tax on sugary drinks is estimated to reduce obesity by 3,8% in men and 2.4% in women, resulting in 220 000 fewer obese adults. There are significant healthcare cost savings for the government as well as for South African families. It is estimated that this tax may avert approximately 72 000 deaths, 55 0000 stroke-related health-adjusted life years, and over R5 billion in healthcare costs over 20 years4.

Evidence that sugary tax has made an impact

Evidence shows that in jurisdictions where it has been implemented, sugary drinks taxes made an impact and lowered consumption of sugary beverages.

In Mexico purchases of sugary drinks fell by 6% in the first year of the tax. After the tax was implemented, Mexico experienced a significant reduction in sugary drink purchases5,6, increases in water purchases5, and no change in total employment7.

South Africa is currently leading the obesity statistics in Sub-Saharan Africa, and our numbers speak for themselves. Almost 70% of women and 39% of men are overweight or obese, with the condition growing at a much rapid rate among children than adults.

Obesity is linked to the development of NCDs, such as Type 2 diabetes, heart disease and strokes, which are among the top 10 causes of death and disability, accounting for 43% of deaths in the country.

WHO declared the consumption of sugary drinks as a major cause of obesity, diabetes and dental caries. The taxing of sugary drinks is one of the best strategies to discourage intake. South Africans are listed among the top 10 consumers of sugary drinks in the world.

Sugar industry claims

Recent claims by the sugar industry blaming the sugary drinks tax for job losses in the industry remain unsubstantiated. The sugar industry has been in crisis for more than a decade. The facts are clear:

  • The world sugar price halved between 2009 and 2014 (from about US$600/ton to about US$300/ ton).
  • The EU reduced its the export quota for sugar, which many southern African sugar producers had access to under the Lomé Convention, from US$524/ton in 2009 to US$335/ton in 2014.
  • Sugar production in South Africa has dropped by around 33% between 2002 and 2012.
  • Illovo reduced its workforce by 25% between 2009 and 2014.
  • Three successive droughts have had a significant impact on cane production.

Three major sugar corporations – Tongaat Hullet, Illovo and Transvaal Suiker Beperk (TSB) – account for 90% of sugar production in the SADC region.

These three corporations have protected their profit base by increasingly outsourcing sugar cane growing to small farmers – called out-growers – who assume all the risk and have borne the brunt of successive droughts. The proliferation of black small-scale sugar cane growers has benefited the industry far more than most farmers. In the 1990s, there were about 50,000 small farmers but this has plunged to 20,500 registered small growers as drought and debt have taken their toll.

Today, Illovo and Tongaat Hulett both source more cane from other sub-Saharan countries than South Africa because labour costs are cheaper. Regional production of sugar cane totaled 36 million tons in 2012, and South Africa’s share of total regional production dropped from 60% in 1992 to 40% in 2012. This is the cause of local job losses, not the health promotion levy.

References:

  1. NCD Risk Factor Collaboration (NCD-RisC). Trends in adult body-mass index in 200 countries from 1975 to 2014: a pooled analysis of 1698 population-based measurement studies with 19·2 million participants. The Lancet. 2016; 387(10026): 1377-96)
  2. Pillay-van Wyk V, Msemburi W, Laubscher R, Dorrington RE, Groenewald P, Glass T, et al. Mortality trends and differentials in South Africa from 1997 to 2012: second National Burden of Disease.
  3. World Health Organization. FIscal policies for diet and the prevention of noncommunicable diseases. Geneva: WHO,, 2016.
  4. Manyema M, Veerman LJ, Tugendhaft A, Labadarios D, Hofman KJ. Modelling the potential impact of a sugar-sweetened beverage tax on stroke mortality, costs and health-adjusted life years in South Africa. BMC Public Health. 2016; 16(1): 405.
  5. Colchero MA, Popkin BM, Rivera JA, Ng SW. Beverage purchases from stores in Mexico under the excise tax on sugar sweetened beverages: observational study. BMJ. 2016; 352.
  6. 55.       Colchero MA, Salgado JC, Unar-Munguía M, Molina M, Ng S, Rivera-Dommarco JA. Changes in Prices After an Excise Tax to Sweetened Sugar Beverages Was Implemented in Mexico: Evidence from Urban Areas. PLoS ONE. 2015; 10(12): e0144408.
  7. Guerrero-López CM MM, Juan A. Rivera, Colchero MA.,. Employment changes associated with the implementation of the sugar-sweetened beverage and the nonessential energy dense food taxes in Mexico. In: Mexico NIoPHo, editor. Cuernevaca; 2016.
  8. Colchero MA, Rivera-Dommarco J, Popkin BM, Ng SW. In Mexico, Evidence Of Sustained Consumer Response Two Years After Implementing A Sugar-Sweetened Beverage Tax. Health Affairs. 2017; 36(3): 564-71.
  9. Ng SW JR, BM Popkin, MA Colchero. . Did high purchasers respond differently to the excise tax to sugar sweetened beverages in Mexico. Cuernevaca and Chapel Hill: INSP-UNC; 2016.
  10. Alex Dubb (2015). Dynamics of decline in small-scale sugarcane production in South Africa: evidence from two ‘rural’ wards in the Umfolozi region. Land Use Policy 48, 362 – 376 http://dx.doi.org/10.1016/j.landusepol.2015.06.029
  11. Alex Dubb (2016) The Rise and Decline of Small-Scale Sugarcane Production in South Africa: A Historical Perspective, Journal of Agrarian Change, Vol. 16 No. 4, October 2016, pp. 518–542. doi: 10.1111/joac.12107
  12. Alex Dubb, Ian Scoones & Philip Woodhouse (2017) The Political Economy of Sugar in Southern Africa – Introduction, Journal of Southern African Studies, 43:3, 447-470, DOI:10.1080/03057070.2016.1214020https://www.tandfonline.com/doi/full/10.1080/03057070.2016.1214020
  13. Stephen Greenberg (2017) Corporate power in the agro-food system and the consumer food environment in South Africa, The Journal of Peasant Studies, 44:2, 467-496, DOI:10.1080/03066150.2016.1259223
  14. Greenberg et al (2017) ‘Trade, food and nutrition security in South Africa: The cases of sugar and poultry’, Working Paper 46. PLAAS, UWC: Cape Town.
  15. Paul James & Philip Woodhouse (2017) Crisis and Differentiation among Small-Scale Sugar Cane Growers in Nkomazi, South Africa, Journal of Southern African Studies, 43:3, 535-549, DOI: 10.1080/03057070.2016.1197694
  16. Alex Myers, David Fig, Aviva Tugendhaft, Jonathan E Myers & Karen J Hofman (2017): The history of the South African sugar industry illuminates deeply rooted obstacles for sugar reduction anti-obesity interventions, African Studies, DOI: 10.1080/00020184.2017.1311515
  17. Alex Myers, David Fig, Aviva Tugendhaft, Jessie Mandle, Jonathan Myers & Karen Hofman (2015): Sugar and health in South Africa: Potential challenges to leveraging policy change, Global Public Health: An International Journal for Research, Policy and Practice, DOI: 10.1080/17441692.2015.1071419
  18. G. Smith, S. Davis, S Madho and A. Chary, ‘Eighty-Eighth Annual Review of the Milling Season in Southern Africa’, Proceedings of the South African Sugar Technologists’ Association, 86 (2013), pp. 24–54.)
  19. Thow et al (2017) ‘Food trade and investment in South Africa: Improving coherence between economic policy, nutrition and food security’, Working Paper 50. PLAAS, UWC: Cape Town

About HEALA 

 HEALA is an advocacy group aimed at improving the health of South Africans and creating a healthier food environment for all by empowering South Africans to make healthier food and lifestyle choices to prevent non-communicable diseases.