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Does 'sin tax' have the desired impact on consumer behaviour?

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Coughing Up to Cut Down?

In his recently delivered Budget Speech, Finance Minister Pravin Gordhan said that the anticipated 20% tax on sweetened sugar beverages (SSBs) will be implemented later this year once details are finalised and the legislation is passed. The taxation of SSBs has apparently been instigated to help curb obesity amongst South Africans and in turn reduce their risk of heart disease, diabetes and cancer. “But will this have the desired impact on consumer behaviour? Could the answer be found by looking at the impact of other ‘sin taxes?” asks Jacki McEwen, Co-owner & Managing Director at Eclipse Public Relations.

According to a research paper by the World Health Organisation, “In the past decade the [South African] government has substantially increased the excise tax on tobacco products for health reasons.” Currently, smokers are paying an additional 6.7% on a packet of 20 cigarettes. The paper also states that, “econometric evidence indicates that the resulting price increases have had a significant impact on cigarette consumption”.  

“While this evidence may seem to support the theory that consumers have cut down as a result of having to cough up, qualitative research may suggest otherwise,” says McEwen.

Cost not a primary concern

A straw poll was taken on Facebook in a post asking: “How many people have given up or are considering giving up smoking and what were/are the top two reasons why.” The post garnered 35 responses from people of various ages, genders, races and geographic locations around South Africa. Of the 35, only five mentioned the cost. Quality of life and health, on the other hand, emerged as the primary causes for quitting.

Below are some of the responses to the poll: 

A female Capetonian (25) said: “I was incredibly paranoid about its effect on my health as I felt sick most of the time and it became very inconvenient with travelling and work - the stress of not being able to smoke for 10 hours on a plane or during working hours was intense.”

A 41-year old male from Johannesburg commented: “I started feeling like a social outcast as fewer and fewer people smoke.  I also felt it was time to live a healthier lifestyle.”

A Durbanite in his late thirties revealed: “I needed to stop because I developed asthma, particularly during winter. My breathing was heavy all the time and I struggled to get active.”

Pain promotes change

Clinical psychologist, acclaimed leadership expert and best-selling author, Dr Henry Cloud, once stated: “We change our behaviour when the pain of staying the same becomes greater than the pain of changing. Consequences give us the pain that motivates us to change.” 

McEwen notes: “As evidenced by the straw poll respondents, it was the realisation that the consequences of continuing to indulge in unhealthy behaviour, smoking in this case, outweighed any previously perceived benefit of the activity or the consequences of paying additional taxation.” 

“While having to pay an excise on sugary drinks may possibly serve as a motivator for some consumers to avoid buying these beverages, ultimately the decision to make healthier choices rests with the individual and not the state. Shouldn’t the government be focused on providing better education and increasing awareness thereby enabling the public to make informed decisions about improving their own health and well- being? Surely prevention through education has to be better than prevention through taxation?” concludes McEwen.

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