Taxes on tobacco, alcohol, sugary drinks and ultra-processed food offer a way to raise finances while reducing consumption, and yet are not being used to their full advantage on the African continent, say experts.
A report co-authored by University of Cape Town (UCT) academics argues many African countries, including South Africa, could make greater use of these taxes, helping to boost finances while slashing consumption and thus reducing illness and premature death, reports BusinessLIVE.
The document by Vital Strategies, Economics for Health and UCT’s Research Unit on the Economics of Excisable Products (Reep) was released last week – as countries negotiate a political declaration that will be adopted at the UN high-level meeting on non-communicable diseases (NCD) in New York in September.
Public health advocates would like to see it include a firm commitment to implement health taxes.
The non-profit NCD Alliance has accused governments of bowing to industry pressure, and said on Friday that the text of the draft declaration had been watered down so that governments would agree to consider, rather than enact, such taxes.
Reep director Corné van Walbeek said SA could extract more benefit from its excise tax regime for unhealthy products, in tax design and enforcement.
As an example, the health impact of the excise tax on wine could be improved if the Treasury implemented its proposal to introduce a regimen based on alcohol content instead of the current per-litre pricing system. This would create an incentive for wine producers to reduce the alcohol content of their wine, he said.
The report said SA already applies excise taxes to beer-based alcoholic content, making it one of only three African countries to do so. The other two countries are Namibia and Equatorial Guinea. Yet the overall tax on beer in SA is low, resulting in prices that are among the lowest in Africa, contributing to high consumption.
Only about 30% of Africans drink alcohol, but those who do are among the world’s heaviest boozers, the report noted, with binge-drinking being particularly severe in SA, where 59% of drinkers report heavy drinking episodes in which they consume five or more drinks.
On the tobacco front, the illicit trade in cigarettes is undermining the impact of excise taxes on consumption, said Van Walbeek.
Reep researchers previously estimated that more than half of the cigarettes sold in this country are produced by companies that don’t pay excise tax, who can thus undercut the prices of products marketed by tax-compliant companies.
“It is a significant failure of government and an indictment of the tobacco industry,” he said.
The excise tax on the most-sold brand of cigarettes in SA in 2024 was 45.7%, comparing favourable with the median tax component of the price of tobacco products sold in Africa of 41%, shows the report. The figure is highest in Mauritius, at 64.8%.
BusinessLIVE article – African countries underutilise health taxes, report finds (Restricted access)
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