Will ‘tax’ reduce the obesity epidemic in South Africa?

Will ‘tax’ reduce the obesity epidemic in South Africa?

South Africans have become more obese over the last 30 years and SA is now considered the most obese country in Sub-Saharan Africa. Over half of the country’s adults are now overweight and obese; this includes 42% of women and 13% of men who are obese. Proliferation of junk food outlets in South Africa has doubled in the last decade making French fries and sugar sweetened beverages (SSBs) easily accessible. Research carried out by University of Witwatersrand has found that by instituting a 20% tax it is predicted to reduce energy intake by about 36 kilojoules a day ,resulting in 3.8% reduction in obesity in men and 2.4% reduction in women. Furthermore the nation is confronted by an impending childhood obesity epidemic which if not addressed immediately will heavily impact the future health systems and cause unnecessary suffering. Introduction of tax on sugar sweetened beverages (SSBs) is welcomed. However will the introduction of tax on SSBs reduce the increasing obesity epidemic? Should the tax be complemented by other health interventions or the initiative should be abandoned altogether?

Proposals to tax sugar sweetened beverages (SSBs) have been a topic of significant controversy over the last few years and should be complemented with possibly subsidizing healthier alternatives. The idea behind these proposals is to discourage the consumption of food that leads to obesity, heart disease and diabetes by financially penalizing their consumption. In 2005, Minister of Finance in South Africa Trevor Manuel increased tax on alcoholic beverages ranging from 9% to 20% depending on the type. Besides this noble initiative to reduce alcohol consumption the problem of alcohol abuse still exists. Studies have shown that alcohol taxes in South Africa are regressive and at times fail to achieve the desired results.
Sugar sweetened beverages such as soft drinks appear to be the largest statistical driver of the obesity epidemic in South Africa. Introduction of taxes on SSBs is likely to have compounded impacts on the poor. How? Regressive taxes are those taxes that disapprotionately affect the poor, who typically spend a larger proportion of their income on food than the wealthy .In fact, research into the impact of taxes on soft drinks reveals that such taxes have the potential to be most beneficial to low income people, particularly because obesity is a “regressive disease”-disproportionately affecting the poor and low income groups. The poor tend to consume more soft drinks and are more sensitive to higher prices than the wealthy; higher taxes on SSBs in turn seem to direct them towards a great, free alternative source of refreshment; water.

Price elasticity refers to the degree to which a consumer will alter their purchasing behaviours of a product in response to a change in price. If a good is very inelastic, often because there’s no alternative or because the product is basic necessity, then even a marked increase in price won’t change how much people buy a product. In the food realm, eggs are a relatively inelastic product that people buy even after significant price hikes. But soft drink consumption is rather elastic, such that a 10% increase in price amounts to about 8% drop in consumption. Some reports from Coca Cola and Pepsi report an even higher effect on price increases. Of course the degree of elasticity can change with the size of a tax; very small taxes have not shown great effect in some settings, but even small taxes on beverages show significant impact on populations that are most at risk for obesity from sugar sweetened beverages; low income people and kids who purchase soft drinks at school.

Use of nudges has been used across a range of settings from schools, food outlets and restaraunts. Nudges are cues used to influence consumer behaviours and the introduction of taxes is a small nudge with positive impacts. Whereas there has been highlight on SSBs; obesity is a result of unhealthy diets, physical inactivity and at times smoking or excessive alcohol intake. Is there enough data to support limiting soft drink intake? Hence it is imperative to integrate a more collaborative approach which has the potential to address obesity from a pragmatic perspective. In my next article I will focus on other nudges which can be used to reduce the obesity epidemic.