The Rural Health Advocacy Project (RHAP) has launched a powerful campaign calling for increased taxes on sugary drinks, alcohol, and tobacco products. This movement, backed by a coalition of health tax advocates, seeks to reduce the consumption of harmful products and alleviate the financial pressure on South Africa’s public health system.
Last week, RHAP brought together an alliance of health activists and academics, including the Medical Research Council/Wits Centre for Health Economics and Decision Science (Priceless SA) and UCT’s Research Unit on the Economics of Excisable Products (Reep). Their goal is simple: raise taxes on harmful products to match the extent of the damage they cause.
According to RHAP director Russell Rensburg, the current excise taxes on tobacco products, which contribute around R9 billion to the fiscus, fall short of covering the R52 billion burden tobacco-related diseases place on South Africa’s public health system.
The Treasury’s stance on health taxes
The Treasury has previously emphasised that the primary objective of these taxes is to reduce consumption, not necessarily to generate revenue. However, as the medium-term budget policy statement, to be tabled by finance minister Enoch Godongwana approaches, there is growing pressure from both supporters and critics of these taxes.
At a recent symposium hosted by RHAP, Reep presented overwhelming global evidence showing that higher excise taxes on tobacco are the most effective measure to reduce consumption. The World Health Organisation (WHO) supports this stance, recommending a 75% excise tax, far above South Africa’s current target of 40%.
Reep advocates a 5% increase in tobacco excise taxes in the next budget and suggests a similar increase in beer taxes to help curb excessive alcohol consumption.
The push for a higher sugar tax
The Healthy Living Alliance (Heala) is lobbying for an increase in the sugar tax and its extension to fruit juices. However, this proposal faces stiff opposition from SA Canegrowers, which argues that heightened taxes could lead to further job losses in the sugar industry. SA Canegrowers, representing 24,000 small-scale growers and 1,200 commercial farms, claims that the initial introduction of the health levy in 2018 already led to the loss of 16,000 jobs.
In response to Heala’s campaign, SA Canegrowers has argued that focusing solely on sugar as the cause of South Africa’s health problems is an overly simplistic approach. It highlights the broader range of issues affecting public health, including stress, violence, lack of exercise, and poor access to a diverse diet.
As RHAP and its allies continue their campaign for higher taxes on harmful products, the debate between health advocates and industry representatives rages on. While higher taxes could reduce consumption and improve public health, the potential economic impact, particularly on jobs in industries like sugar production, remains a contentious issue. All eyes will be on the upcoming budget statement for possible changes to the current tax framework.