Health Promotions Levy – The Sugar Tax and Where We Are Now

“It ain’t over until the fat lady sings “-
the South African sugar tax finale

Authors: SANCDA Vicki and David Pinkney-Atkinson

Written for NCDA and published on the SANCDA website

After 18 months of public wrangling the Health Promotions Levy (HPL), also known as the “sugar tax”, is inching closer to a finale. With stakeholder consultation drawing to a close, a final step is an Act that includes a tax on sugary drinks. The decision must be made by legislative structures to implement or withdraw the tax. It is a final critical drama. For now.

The outcome cannot be taken for granted within the current South African political climate. In other words, it is a “don’t count your chickens until they hatch” scenario. A cliffhanger to the last. The South African NCDs Alliance (SANCDA), its partners and allies, have participated in the public roller coaster ride. It supports the tax as a positive step towards health in a whole package of interventions. Note, it is one of many planned but unfinanced interventions needed to promote health and kerb non-communicable diseases (NCDs). Sugar is the new tobacco.

If you are like us, the nuances of what it takes to pass a tax law are mysterious and not within our everyday grasp of life. So, get to know music overture to the final act of how this happens. In South Africa, this is how a law is tabled and passed.

Using the “sugar” and “tax” together is an oxymoron. Simply confusing with one seen as good and the other as bad. Like the “teenage brain”. So, from childhood we learn the following:

• Tax is bad = “Nothing is certain but taxation and death.”
• Sugar is good = “Sugar and spice and all things nice.”

So, sugar is good? Fact check: too much sugar, especially in a cheap and easy to access form like “soft drinks” or “sodas” is linked to obesity, diabetes, cancer, tooth decay and heart disease. The illnesses resulting from sugary drinks are estimated to have cost the South African economy R23 billion in 9 years to treat and fight obesity only. A local study shows R10 billion will be saved over the next 20 years if we count type 2 diabetes alone.

Tax is bad. So, predictably questions in our country are likely one of the following versions:

• Why should I care, I don’t drink Coke and I am not fat?
• This is another clever money grabbing way for the government to hit my shrinking wallet.
• Don’t waste my money on a frivolous tax that will be wasted like so much of our money is already lost through wasteful expenditure and other nefarious means.

Let’s start by educating our people that this is an important issue that is bigger than simply saying “no” to sugary drinks. South Africans simply don’t know enough about the risks and dangers of too much sugar and its relationship to obesity and NCDs. This tax has just highlighted how much further must be done. It’s not simply about sugary drinks, these are the visible part of the problem

The cost of obesity and diabetes to South Africans is called the “burden of disease” and is often expresses as the number of people who get sick and die of certain diseases. It costs all of South Africa because our fragile health system must cope with most of the people and each of us have to pay for it in some way. It may be your mother or brother or child. Who cares for you when you have lost your leg to diabetes and can’t walk? Someone in your family needs to stop everything and care for you. This means that they and often you lose their income in caring for you.
Fact checks

• South Africa is the fattest nation in sub-Saharan Africa
• Diabetes the number 2 killer of people in South Africa after TB
• Cutting sugar levels will cut obesity and crippling illnesses.

Our collective lack of awareness as a nation and education is why the SANCDA calls for part of the money collected to be used for the prevention of obesity and related non-communicable diseases (NCDs). NCDs in the health budget is neglected and underfunded, even though these illnesses are the leading cause of death in South Africa.

“Government is committed to increasing investment towards health promotion targeting non- communicable diseases alongside the implementation of the sugary drinks tax, such as diabetes screening and nutrition education.”
 Minister Pravin Gordhan, Budget speech 22 February2017

The SANCDA celebrates the proposed allocation of additional resources for health and NCDs prevention. We lament that organisations like CANSA, Diabetes South Africa and the Heart and Stroke Foundation with active programmes are not considered for funding. Let’s not forget over 10 cancers are linked to, and many children lose teeth because of sugar excess.

The HPL is a better, if not as catchy, name that puts the focus where it belongs on health promotion and primary prevention of obesity and NCDs.  The sugary drinks tax timeline in the box below shows where we have come from and where we are going in the “final” act for now.

As expected the food and beverage industry does not want this tax and has aggressively campaigned against it. The ultimate weapon, in a country with all-time high unemployment rates and in a technical recession, is to claim that massive job losses will result. Job loss claims range from 72,000 jobs to 5,000. The initial estimate from Treasury was less than 11% of those claimed.

The ball is firmly in the court of the food and beverage industry according to Treasury’s response published this week and presented to the Finance Standing Committee. If the beverage industry reformulates to meet the new requirements of 4g/100ml the job losses are estimated to be significantly less at 2,392 jobs across the sector.

The HPL isn’t only a tax digging into your pocket and costing you more. We, the South Africans, are acting now to change the health of our children’s future. We did it for HIV/AIDS now we need to do it for all of us once again. Take a lesson from the past. When taxes and levies were first placed on cigarettes it was met with the same view, but as money, educated people and the health risks became more abundant. You’d be hard pressed to find a single person upset about the cost of smoking and the measures taken to dissuade people from it. The HPL is here to stop an even greater cost to us in the next 10 years.

The introduction of the draft taxation bill in February is watered-down version with the taxation reduced by almost half. The graphic shows the details.

In our democratic society, the bill must be passed with the taxation of sugary drinks at any level to change the health of the nation.

As the discussion is set continue as we reach the final act. The SANCDA, together with its global and local partners, will keep monitoring the progress and keep you informed. These insights make what is being worked towards an evidence based path to follow having been tailored to fit the uniquely South African way forward. Together they are all working towards this goal finally becoming a reality.

We are committed to sharing experiences and lessons learnt in this crucial final act as we wait for the “fat lady to sing”.