Nicholas Stacey PRICELESS SA MRC Rural Public Health and Health Transitions Unit School of Public Health University of the Witwatersrand Overview Disease burden Sugary drinks Taxation of Sugary Drinks ID: 1045337
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1. The Health Promotion LevyNicholas StaceyPRICELESS SAMRC Rural Public Health and Health Transitions UnitSchool of Public HealthUniversity of the Witwatersrand
2. OverviewDisease burdenSugary drinksTaxation of Sugary DrinksThe Health Promotion Levy legislationConclusion
3. Obesity and NCDs
4. In South Africa there are now 19 million obese or overweight adults Source: SADHS 2003, SADHS 2016, Stats SA
5. Over 20% of children obese or overweightSource: NFCS, SANHANES-1
6. Diabetes is a crisis in motion and largest killer of South African womenRanking Cause% of all deaths in 20151Tuberculosis7.2%2Diabetes5.4%3Cerebrovascular diseases 5.0%4Other forms of heart disease4.8%5Human immunodeficiency virus [HIV] disease4.8%Source: Stats SA
7. ~10 000 new cases of diabetes/ month in the Public Healthcare Sector Source: DHIS
8. Significant Growth in diabetes among medical scheme membersConditionPrevalence, cases per thousand (2013)% Change in Prevalence (2008 - 2013)Hypertension87.233.1Hyperlipidaemia34.7825.5Diabetes Mellitus type 226.9167.9Ischaemic heart disease6.874.4Cardiomyopathy4.226.5Source: CMS (2015)
9. Sugary Beverages
10. Sugary drinks are high in sugar and South Africa is a high consumerPer capita consumption of Coca Cola products (Top 10)Source: Coca Cola Company annual review, 2012Sugar content in 330ml SSB
11. While obesity rises, sugary beverage sales growing…Source: Euromonitor International (2016)
12. Sugary Beverages and HealthEvidence linking sugary beverages to obesity and related diseases in adults and childrenConsumption increases risk of diabetesConsumption increases risk of weight-gain(Malik et al., 2010; Malik et al., 2013; Malik et al., 2006; Hu, 2013; Popkin and Hawkes, 2016)Even cross country studies find higher sugary beverage intake increases obesity and diabetes (Basu et al., 2013)
13. Sugary Beverage Taxation
14. WHO: Fiscal Policies for Diet and Prevention of Non Communicable Diseases (2016)Well designed fiscal policies with other actions will contribute to reducing health/economic burden from NCDsEvidence strongest for SSB taxes – at a minimum 20%Low income and young people are most responsive to price changeTaxes on beverage sugar content will have greatest impact
15. Increased Prices reduces Sugary Drinks ConsumptionTax increases price, increased price reduces consumptionIn absolute terms, raised prices reduces resources for sugary drink consumption (Income Effect) Tax also raises price relative to alternatives (Substitution Effect)Cost-effective means to prevent NCDs (Ceccini et al., 2010)Sales of Carbonates vs Per litre Price in South AfricaSource: Euromonitor International (2016)
16. Modelled potential impact of a 20% SSB tax based on 2012/13 SANHANES consumption (Manyema et al, 2014):Obesity reduction by 3.8% in men and 2.4% in womenDecrease in obese people by 220 000 Mostly in first 3 yearsSugary drinks tax could impact burden of overweight and obesity in South AfricaLiterature review shows that excise tax on SSBs is likely to reduce consumption and potentially obesity in South Africa
17. Taxation versus other measures?Front-of-pack labels and advertising restrictions:In preparation at NDoHReformulation:Voluntary commitments to reformulate are not credibleSmall reductions in sugar content per drink will be un-dun by growth in number of drinks consumedEducation and media campaigns:Without revenue from tax, complementary education and health promotion interventions not affordableCrisis mode requires intervention with quickest and largest population impact
18. Scare tactics: exaggerated claims of job lossesIndustry groups hired financially-conflicted consultants to undertake non-academic studiesMade misleading assumptions Assumed people would not buy other non-taxed beverages or other productsAssumed revenue would not be spent by governmentAll of their “studies” ignored beneficial impact of reduced disease and disabilityIn other settings, underlying trends in employment continue regardless of tax
19. NCDs have an Economic ImpactNCDs are an economic burden on households:Lost wages of prime-age adults due to death and disabilityThere are significant costs of mortality (funerals, etc.) on households In 2009, 2000 diabetes-related amputations, 8000 diabetes-related blindness (Bertram et al., 2013)Macroeconomic impact of NCDs in SA (% of GDP)2015Early retirement due to ill health2.1%Absenteeism + Presenteeism4.7%Total6.8%2030Early retirement due to ill health2.2%Absenteeism + Presenteeism4.9%Total7.0%Source: USCC (2015)
20. The cost of inaction: as we delay, obesity risesSoft drink projected growth of 2.4% per year: 2012 – 2017SAB targeting LSM 1 - 32016% increase in obesity by 2017 (9 million people)20% of this increase due to sugary drinks- 280,000 peopleMostly young South Africans affectedSA Beverages, Investors February 2012Source: Tugendhaft et al, 2015
21. The Health Promotion Levy Legislation
22. The revised proposal reduces rate significantly
23. The Health Promotion Levy legislationThe changed rate structure is a significant CONCESSION to industry interestsEffective tax rate reduced from 20% to ~10%, below WHO recommendationsHealth effects likely will be smaller, however a 10% tax in Mexico yielded meaningful reductions in beverage sales (Colchero et al., 2016, 2017)Lower marginal rate on concentrates a further concession to industryCommitment of revenue to health promotion is important
24. ConclusionWe are in the midst of obesity and NCD crisis.Consumption of sugary drinks linked to onset of these diseasesThe Health Promotion Levy presents opportunity to:reduce consumption of these harmful products,Incentivizes production and marketing of healthier productssimultaneously raise revenue for further health promotion interventions
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26. Thank you