The distributional impact of taxing sugar-sweetened beverages: findings from an extended cost-effectiveness analysis in South Africa

Akshar Saxena · Nicholas Stacey · Paula Del Ray Puech · Caroline Mudara · Karen Joanne Hofman · Stéphane Verguet

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Global Public Health Policies and Epidemiology Economic and Fiscal Studies Obesity, Physical Activity, Diet

Abstract

BACKGROUND: Facing increasing obesity prevalence and obesity-related disease burden, South Africa has devised an obesity prevention strategy that includes a recently implemented tax on the sugar content of sugar-sweetened beverages (SSB). We assess the potential distributional impact (across socioeconomic groups) of this tax on type 2 diabetes mellitus (T2DM) incidence and associated mortality and its financial burden on households. METHODS: We conducted an extended cost-effectiveness analysis of the new 10% tax on SSBs in South Africa, and estimated: the averted premature deaths related to T2DM, the financial benefits to households (out-of-pocket (OOP) medical costs and indirect costs due to productivity losses averted), the increased government tax revenues and healthcare savings for the government, all across income quintiles. FINDINGS: A 10% SSB tax increase would avert an estimated 8000 T2DM-related premature deaths over 20 years, with most deaths averted among the third and fourth income quintiles. The government would save about South African rand (ZAR) 2 billion (US$140 million) in subsidised healthcare over 20 years; and would raise ZAR6 billion (US$450 million) in tax revenues per annum. The bottom two quintiles would bear the smallest tax burden increase (36% of the additional taxes). The bottom two income quintiles would also have the lowest savings in OOP payments due to significant subsidisation provided by government healthcare. Lastly, an estimated 32 000 T2DM-related cases of catastrophic expenditures and 12 000 cases of poverty would be averted. CONCLUSIONS: SSB taxation would have a substantial distributional impact on obesity-related premature deaths, cost savings to the government and the financial outcomes of South Africa's population.

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References

2007Analyzing Health Equity Using Household Survey Data 2016Beverage purchases from stores in Mexico under the excise tax on sugar sweetened beverages: observational study 2017The global economic burden of diabetes in adults aged 20–79 years: a cost-of-illness study 2014Health and Health Care in South Africa — 20 Years after Mandela 2017Changes in prices, sales, consumer spending, and beverage consumption one year after a tax on sugar-sweetened beverages in Berkeley, California, US: A before-and-after study 1998How to Calculate Indirect Costs in Economic Evaluations 2018Overcoming Poverty and Inequality in South Africa : An Assessment of Drivers, Constraints and Opportunities 2016Extended Cost-Effectiveness Analysis for Health Policy Assessment: A Tutorial

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