HILARY JOFFE: If sinning there will be, the wages ought to come to the Treasury

The sugary drinks tax has been impressively effective

21 February 2021 - 00:10 By Hilary Joffe

The past couple of weeks have been a veritable virtual feast of budget previews, predictions and presentations. But only one made me to want to put up my virtual hand to pledge, absolutely, that I hadn’t had a drink in ages. A sugary soft drink, that is. And listening to the experts at the Healthy Living Alliance/Rural Health Project pre-budget briefing, I couldn't help wondering, again, why SA banned cigarettes but not sugar, which seems even more likely to land people infected with the coronavirus in hospital, or, tragically, the morgue. Wits University public health professor Karen Hoffman puts the annual direct cost to the South African health system of diabetes and hypertension at R13.2bn, with projections that could rise to R35bn by 2035. And evidence is that the vast majority of the people hospitalised with Covid, of all ages, had these conditions.

Health taxes in total make up just 3.5% of total government revenue, but they are important and the policy issues are interesting, especially after SA’s prohibition era of the past year. Going into the budget, an intriguing issue is going to be whether the finance minister takes the opportunity to hike taxes on alcohol and tobacco by more than usual. There have long been voices arguing for the tax incidence on these goods to be hiked to much higher levels, to drive up retail prices and so curb smoking and heavy drinking. But the concern has always been that too high prices would simply drive the trade underground, creating incentives for smugglers and illicit manufacturers to thrive and so rob the Treasury of the revenue and SA of the health benefits...

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