It’s not an alcohol sin tax, it’s a well being tax –…

The Southern African Alcohol Coverage Alliance calls on Treasury to make use of the Finances speech to announce a big enhance within the excise tax on alcohol to discourage extreme consumption and lift funds for public well being promotion.

Annually in February, the minister of finance delivers the annual Finances speech, which outlines how Treasury will increase the cash that the federal government must do its work, and the way these funds might be spent. Most of these funds come from the assorted tax, responsibility and levy funds that the federal government will get from people and companies within the nation. 

One kind of tax or responsibility that by regulation have to be paid by some industries is excise tax (generally inappropriately referred to as “sin tax”). Excise tax, which is normally elevated yearly, is a particular responsibility imposed on objects that may trigger hurt to folks, reminiscent of alcohol, tobacco, sugar and gasoline.

We want to argue that there are various the reason why this tax needs to be referred to as a well being tax, as a result of in actuality it’s a budgetary software to advertise the well being and wellbeing of our folks.

It may possibly do that in two methods. One is to encourage folks to scale back their consumption of a dangerous product by rising its worth and making it much less reasonably priced. The opposite is for the cash collected by this “well being tax” for use to fund authorities and non-government programmes to scale back the hurt attributable to a product, and to help those that have already been harmed by it by offering them with therapy.

As indicated, one of many dangerous merchandise on which excise tax have to be paid is alcohol. Over the previous 12 months, the entire nation has seen the hurt that alcohol may cause. When the federal government suspended the transportation and sale of alcohol below Covid-19 state of catastrophe laws in 2020, the variety of folks touchdown up in trauma items in hospitals with accidents attributable to alcohol-related automotive crashes and interpersonal violence dropped dramatically. 

On New 12 months’s Eve 2020, for instance, for the primary time within the historical past of Chris Hani Baragwanath Hospital in Soweto, there have been no alcohol-related admissions to its trauma unit due to the third suspension on the sale of alcohol, which started on 28 December 2020. Nevertheless, when that suspension was lifted firstly of February 2021, there was a rise in trauma sufferers within the Western Cape from 290 instances the week earlier than the lifting of the ban to 596 (greater than double) the week after. 

One of many challenges the nation faces is that alcohol, particularly beer, may be very low cost, which signifies that individuals who drink it could afford to drink rather a lot, resulting in a rise in alcohol-related hurt. This isn’t shocking as a result of excise tax has not been used successfully to discourage folks from ingesting an excessive amount of. 

Based on Treasury figures, excise tax on beer has truly gone down in actual phrases over the previous 5 years. For instance, in 2016 rands, the excise tax enhance on one bottle of beer was R5, however in 2018 – additionally in 2016 rands – the rise was solely R1.60.

A research was accomplished in 2018 by Nicholas Stacey and others to mannequin the influence of accelerating excise taxes (or the well being tax, as we name it) on sure dangerous merchandise. They discovered that when you elevated the tax price, folks would eat much less of them and, in consequence, dwell longer. They calculated the profit when it comes to life years saved – which means the overall enhance in years lived throughout the entire inhabitants. 

We additionally name on Minister of Finance Tito Mboweni, when delivering the Finances speech on Wednesday 24 February 2021, to elucidate the importance of the excise tax on alcohol, why it’s vital and the way it can assist to avoid wasting lives. 

They discovered that adopting an excise price of 60% on tobacco would end in a achieve (over 30 years) of 858,923 life years, an excise price of 25% on beer would see a achieve of 568,063 life years and a 20% tax on sugar-sweetened drinks would imply a achieve of 688,719 life years.

To grasp what a achieve of 568,063 life years for alcohol customers over the 30-year interval may imply, give it some thought like this: 56,806 drinkers who’ve consumed much less alcohol may dwell for 10 years longer or 284,032 drinkers may dwell for 2 years longer or, extra doubtless, some mixture of various numbers of drinkers dwelling for various numbers of extra years. 

For those who add up the additional years lived by all drinkers who’ve consumed much less alcohol, it is going to add as much as 568,063 life years gained over a 30-year interval.

It has been proven since earlier than 2009 that “there may be sturdy and constant proof that will increase in worth have the impact of lowering consumption ranges, and charges of alcohol-related issues. Worth has additionally been discovered  to have a good higher affect on youth consumption in comparison with advertising and marketing communications.” 

In different phrases, younger individuals are extra more likely to drink much less if the worth is increased than if they’re informed to “drink responsibly”. 

A World Well being Organisation research reported that Russia used elevated excise tax, with minimal unit pricing and decreased buying and selling hours, as a part of a package deal of interventions to scale back alcohol-related hurt. In a interval of 10 years, the nation decreased alcohol consumption by 43% and elevated the life expectancy of Russian folks by 10 years. 

Right here in South Africa, rising excise tax on tobacco (with different measures) has led to a marked discount in smoking, whereas the brand new 2017 well being promotion levy on sugar-sweetened drinks has led to a drop within the consumption of such drinks as properly.

As famous above, along with encouraging folks to eat much less of those dangerous merchandise, excise tax can assist the federal government increase the funds it desperately wants for coping with the numerous social challenges it faces. For instance, through the latest second wave of Covid-19 infections, the NIDS-CRAM survey carried out in October reported that 41% of households stated that they ran out of cash for meals. 

Funds are wanted to deal with this and different social assist calls for, and to rebuild the financial system – and if these items aren’t accomplished, there might be an extra adverse influence on the well being of our folks.

If the cash raised by rising excise tax goes into the nationwide fiscus and is then allotted for persevering with and bettering the social grants system, thereby serving to to lower starvation, and for bettering education and rising jobs, it’s clear that such taxes are raised to enhance public well being and welfare. 

They don’t seem to be meant to “punish” folks for “sinning” by utilizing alcohol, tobacco or sugar, therefore the necessity to name it a well being tax. 

The Southern African Alcohol Coverage Alliance (SAAPA) SA calls on Treasury to make use of the chance of the Finances speech to announce a big enhance within the excise tax on alcohol (and tobacco and sugar-sweetened drinks) with a view to discourage extreme consumption and to boost funds for public well being promotion. 

We additionally name on Minister of Finance Tito Mboweni, when delivering the Finances speech on Wednesday 24 February 2021, to elucidate the importance of the excise tax on alcohol, why it’s vital and the way it can assist to avoid wasting lives. 

He shouldn’t, as ministers usually do throughout funds speeches, really feel that he has to apologise for rising excise tax on alcohol if it will contribute to creating South Africa a more healthy and alcohol-safe nation for all. DM/MC

Sue Goldstein is a Southern African Alcohol Coverage Alliance South Africa (SAAPA SA) board member. Maurice Smithers is the director of SAAPA SA.