In September, Treasury announced that it would be taking strong measures to curtail government spending as the country faces a concerning debt trap. Among the many causes of the crisis, the government cited lower than expected revenue collections. HEALA was disappointed and dismayed by Health Minister Godongwana’s announcement during the 2023 budget speech in February that there would be a two-year moratorium on the increase on the Health Promotion Levy (HPL). HEALA hopes that during his midterm speech in November, the Minister will not deviate from the governments constitutional obligations to safeguard the wellbeing of ordinary South Africans in order to satisfy the sugar industry and other big business.
To boost the fiscus and improve the health of millions of South Africa, HEALA is calling on the government to expand the sugar tax, known as Health Promotion Levy( HPL) to include fruit juices, increase the tax from 11% to the recommended 20% and reduce the 4g of sugar threshold.
Since its launch in 2018 HPL, a tiered sugar-based excise tax, has yielded a total of R7.9 Billion in revenue collections from domestically produced and imported products. Not only is South Africa is facing a financial crisis, the country is experiencing a concerning increase in noncommunicable diseases such as diabetes, obesity, high blood pressure and heart disease. Diabetes is the second leading cause of death in South Africa. A 2019 study found that 4.58 million people between the ages of 20 and 79 suffer from the disease, however over half of those were undiagnosed (52.4% ). The over consumption of sugar sweetened beverages has been shown to be one of the causes of type two diabetes, a deadly and life changing disease that costs the government billions of Rands a year and putting pressure on the health care system.
While none of the money collected from the tax has not been ringfenced to specifically go towards the prevention of, or alleviation of health conditions stemming from noncommunicable diseases, additional funding for health promotion and chronic disease prevention was allocated in the National Department of Health budget. This allocation is approximately R50 million per annum over the 2021 Medium Term Expenditure Framework.
The National Department of Health has spent R24 million in 2019/20 and R14 million in 2020/21 on the health promotion allocation. Despite mounting evidence that excess sugar consumption is a major cause of obesity and increases the risk of Type 2 diabetes, hypertension, and cardiovascular disease, Treasury has made decisions that favour organisations like SA Cane Growers Association, who maintain that increasing sugar taxes are an unreliable way to discourage the overconsumption of sugar sweetened beverages.
“The added claim by the sugar industry that raising the sugar tax will result in job losses is scaremongering and false. Evidence suggests that, following the levy’s implementation in 2018, it has incentivized certain beverage makers to reformulate their products to contain less sugar, although there has been little evidence of employment losses as a result, says Nzama Mbalati, Programmes Manager at HEALA.
PRICELESS (South African Medical Research Council Centre for Health Economics and Decision Science) analysis of data from the South African Quarterly Labour Force Survey from January 2008 to June 2019 reveals that the sugar tax levy in the form of HPL did not affect jobs or result in any discernible reductions in employment, even in sectors most likely to be impacted by HPL, such as beverage manufacturing, food and beverage retail, and food services.
“Treasury urgently needs to make decisions that will safeguard all South Africans against life threatening diseases. HEALA is calling on the government to put the lives and wellbeing of our people before the profits of industry”, concludes Mbalati.
