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Research
The distributional impact of taxing sugar-sweetened beverages: findings from an extended cost-effectiveness analysis in South Africa
  1. Akshar Saxena1,2,
  2. Nicholas Stacey3,
  3. Paula Del Ray Puech2,
  4. Caroline Mudara3,
  5. Karen Hofman3,
  6. Stéphane Verguet2
  1. 1 Economics, Nanyang Technological University, Singapore, Singapore
  2. 2 Department of Global Health and Population, Harvard T.H. Chan School of Public Health, Boston, Massachusetts, USA
  3. 3 SAMRC/Wits Center for Health Economics and Decision Science - PRICELESS SA School of Public Health Faculty of Health Sciences, University of the Witwatersrand, Johannesburg, South Africa
  1. Correspondence to Stéphane Verguet; verguet{at}hsph.harvard.edu

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.

  • diabetes mellitus
  • sugar-sweetened beverages
  • soda tax
  • South Africa
  • equity
  • distributional impact
  • extended cost-effectiveness analysis

This is an open access article distributed in accordance with the Creative Commons Attribution Non Commercial (CC BY-NC 4.0) license, which permits others to distribute, remix, adapt, build upon this work non-commercially, and license their derivative works on different terms, provided the original work is properly cited, appropriate credit is given, any changes made indicated, and the use is non-commercial. See: http://creativecommons.org/licenses/by-nc/4.0/.

https://doi.org/10.1136/bmjgh-2018-001317

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    Footnotes

    • Handling editor Sanni Yaya

    • Contributors SV, NS and KH conceived the study. SV supervised the study. AS, NS, CM and PDRP collected the data. AS performed the calculations and interpreted the results with SV and NS. AS wrote the first draft of the manuscript. All authors reviewed and edited the manuscript. The corresponding author had full access to all the data in the study and had the final responsibility for the decision to submit for publication.

    • Funding This work was funded by the International Development Research Centre (grant#108424-001).

    • Disclaimer The funder had no role in the study design, data collection, data analysis, data interpretation or writing of the report.

    • Competing interests None declared.

    • Patient consent for publication Not required.

    • Provenance and peer review Not commissioned; externally peer reviewed.

    • Data availability statement Data are publicly available.