Sugar-based beverage taxes and beverage prices: Evidence from South Africa's Health Promotion Levy

Publication date: Available online 31 July 2019Source: Social Science & MedicineAuthor(s): Nicholas Stacey, Caroline Mudara, Shu Wen Ng, Corne van Walbeek, Karen Hofman, Ijeoma EdokaAbstractA growing number of jurisdictions are introducing taxes on sugar-sweetened beverages (SSBs) in efforts to reduce sugar intake, obesity, and associated metabolic conditions. A key dimension of the impact of such taxes is how they induce changes in the prices of the taxed beverages and their un-taxed substitutes. At present these taxes have typically been based solely on volume. More recently, however, due to the potential to target the source of SSBs' health harms and to incentivize product reformulation, SSB taxes are being levied based on sugar content. In April of 2018 South Africa implemented such a tax, the Health Promotion Levy (HPL), at a rate of 0.021 ZAR (approximately 0.15 US cents) for each gram of sugar over an initial threshold of 4 g/100 ml. Drawing on a dataset of price observations (N = 71, 677) collected in South Africa between January 2013 and March 2019, we study changes in beverage prices following the introduction of the HPL. We find null price increases among un-taxed beverages and find significant price increases for carbonates, the largest taxed product category. However, within carbonates we find similar price increases in price for low- and high-sugar brands, despite the underlying difference in tax liability. In addition, while we find evidence of product ...
Source: Social Science and Medicine - Category: Psychiatry & Psychology Source Type: research