The Health Promotion Levy taxes applicable beverages at around 10%.
The tax was announced in 2016 and introduced in 2018: with sugar reduction starting after the announcement in 2016, reveals the study conducted by the University of the Witwatersrand (South Africa) and University of North Carolina (US).
Reductions, however, were greater after the tax came into effect: and the authors say their study offers an insight into the tax’s unique design based on sugar content (each gram of sugar beyond 4 g per 100 mL is taxed).
While countries such as the UK have championed the effectiveness of sugar taxes, the South African study provides an insight into how a tax can work in countries with different underlying incomes and levels of beverage purchases, add the authors.
Sugar intake and SSB volumes fall South Africa has the highest level of obesity in sub-Saharan Africa.
The study, published in The Lancet this month, used Kantar Europanel data for 3,000 households across all nine provinces.
Mean sugar from taxable beverage purchases fell from 16.25g per capita per day pre-announcement; to 14.26g capita / day post-announcement; and then to 10.63g capita / day in the year after implementation.
Mean volumes of taxable beverage purchases fell from 519ml capita / day to 492.16g capita / day post-announcement; then to 443.39ml per day post-implementation.
A small increase was seen in the purchase of non-taxable beverages: from 283.45ml capita / day pre-announcement to 316.94ml post-announcement.
Researchers found there were already large reductions in sugar from taxable beverages in the post-announcement period: a 28% calorie reduction and 16% reduction in taxable beverage purchased.
“Changes in purchases in South Africa began after the announcement of the intention to pursue a SSB [sugar-sweetened beverage] tax policy, suggesting that consumption is driven by not only consumers’ response to greater awareness of the harms of SSBs as part of the discussions around the HPL, but also by anticipatory response from the beverage industry.
“The announcement in June seems to have triggered anticipatory sugar-content reduction by volume and other strategies such as downsizing of packaging in the run-up to, as well as after, the implementation of the tax policy.
“These reductions grew over the first year of the HPL (post implementation), with sugar purchased from taxable beverages being 51% lower compared with the counterfactual based on the pre-announcement trends. Likewise, both relative and absolute differences in calories from and volume of taxable beverages were also larger in the post-implementation period compared with the post-announcement period.”
Focus on South AfricaThe study’s authors note that other countries such as the UK have introduced a sugar tax and consequently seen reductions in sugar intake from soft drinks: but caution that there are substantial differences in terms of underlying incomes and levels of beverage purchases, making it harder to use these data as a model for the African continent.
In the South African study, households with lower socioeconomic status purchased larger amounts of taxable beverages in the pre-announcement period than did households with higher socioeconomic status, but demonstrated bigger reductions after the tax was implemented.
“Our findings also align with economic theory and empirical evidence, including earlier findings in Mexico, showing larger relative reductions in purchases of taxable beverages among lower Living Standards Measure (LSM) households compared with reductions observed in higher LSM households.
“Because lower LSM households in South Africa purchased considerably higher amounts (by nearly 230 mL/capita per day) of SSBs before the HPL announcement, a larger relative and absolute reduction among this subpopulation means that the HPL might be progressive for health.
“This is because of the greater price sensitivity, interacting with brands’ sugar reformulation, and the greater burden of poor health (loss of earnings and human capital) in lower-income households and individuals.
“We should note, however, that our sample did not include the lowest LSM households, who make up 5–10% of the population.”
Broader implicationsIn conclusion, the authors say that the South African findings could have an implication for other countries on the continent.
“The announcement and implementation of South Africa’s sugar content-based SSB tax, the HPL, has coincided with large reductions in purchases in terms of volumes and sugar quantities from taxable beverages, with non-significant changes for non-taxable beverages.
“While other countries in sub-Saharan Africa have levied SSB taxes, this is the first country in the region to evaluate such a policy, and our results clearly show positive changes that could offer useful public health gains across the region. The reductions in sugar from taxable beverage purchases suggest a potential role for sugar-based taxes more broadly.”
Source: ‘Changes in beverage purchases following the announcement and implementation of South Africa’s Health Promotion Levy: an observational study’. The Lancet, Planetary Health: April 2021. DOI:https://doi.org/10.1016/S2542-5196(20)30304-1