Non-government organisation the Healthy Living Alliance (HEALA) has called on Finance minister Tito Mboweni to double South Africa’s health promotion levy in his budget next week.
South Africa introduced the health promotion levy – commonly known as the sugar tax – in 2018.
The levy currently adds about 11% to the cost of sugary beverages to help curb the country’s sugar consumption, which health experts say is fuelling a rise in non-communicable diseases, such as diabetes, high blood pressure and obesity.
Currently, beverages are taxed about 2.21 cents per gram of sugar for anything over a 4-gram threshold. The current levy adds about 46 cents to the price of an average can of original taste Coca-Cola, for instance.
The levy does not apply to natural fruit juices or sweetened dairy products.
Within its first two years, the health promotion levy has generated R5.4 billion for government.
“This would have been enough to finance South Africa’s down payment for Covid-19 vaccines from the Covax facility almost 20 times over despite the health promotion levy’s relatively small contribution to government’s overall budget,” said head of the Healthy Living Alliance (HEALA) Lawrence Mbalati.
“If the National Treasury doubled the health promotion levy now, it could net the government around R2 billion to help fund the fight against Covid-19 in the short term. This estimate is based on current consumption levels and the revenue raised by the levy already,” he said.
He added that if Treasury doubled the levy and raised R2 billion, that would be enough to pay for several thousand new nurses and doctors, as well as tens of thousands of community healthcare workers based on average salary ranges.
“This is a watershed moment for the country,” Mbalati said. “Government revenues are under immense pressure and funding the fight against Covid-19, including vaccines, remains critical.”
“Policymakers, and in particular the National Treasury, have an opportunity now to decide to increase the health promotion levy to 20% to raise additional revenue in the short-term,” he said.
“In the long-term, we know that a health promotion levy of 20% will reduce the amount of sugar people eat, decreasing their chance of developing conditions such as diabetes, obesity and high blood pressure that also put people at a higher risk of dying from Covid-19.”