Treasury chooses special interests over people

16 May 2022

For interviews, contact:
Nzama Mbalati, HEALA
082 734 5414

16 May 2022

Treasury’s postponement of a planned 4.5% increase to the health promotion levy, announced in the 2022 Budget, raises concerns about who calls the shots on the country’s national economic and health policy. The increase, initially announced to go into effect 01 April 2022, was a long overdue but welcomed action to curb the high consumption of unhealthy sugary drinks, reducing the risk of health conditions such as diabetes, high blood pressure and obesity. The levy has the additional benefit of generating revenue to support the Budget Review’s stated intent “to extend support to poor and vulnerable South Africans”.

“This delay calls into question the government’s appreciation of our current economic and health crises and looks like an attempt to appease short-term interests at the expense of the long-term health of our nation, says Nzama Mbalati, head of health advocacy organisation HEALA.

South Africa introduced a health promotion levy of 11% on sugary beverages to help curb the country’s sugar consumption fuelling a rise in noncommunicable diseases. The increase would raise the levy from 2.21 cents to 2.31 cents per gram of sugar for sugar-sweetened beverages above the threshold of 4 grams of sugar per 100 ml.

“We know that by reducing the amount of sugar people consume, the levy creates a healthier South Africa, reducing the cost of treating noncommunicable diseases and creating a healthier and more productive workforce, Mbalati explains. But the levy’s benefits are only possible if it keeps pace with inflation, and Treasury hasn’t meaningfully increased the levy since it was introduced in 2018. This delay shows that Treasury has chosen special interests over the health of our country.”

Treasury’s announcement did not explain how or why the government decided to postpone the increase to the current levy, only stating that the 12-month postponement of the increase is proposed to allow consultation on the expansion of the HPL to include fruit juices and lower the 4g threshold of the levy.

“An increase to the existing levy is unrelated to whether the government decides to expand the levy to include fruit juices or lower the sugar threshold. Treasury is deliberately mixing these two issues to appease special interests while at the same time slashing health, education and social support budgets and eroding our socio-economic rights. How long until our government realises that our nation will never meet its economic potential without investment in health and social protection programmes?” says Mbalati.

HEALA is calling for National Treasury to immediately:

  • Stop budget cuts that impactsocioeconomic rights provisions such as health and education;
  • Overturn the proposed postponement and implement the 4.5% increase to the HPL immediately, alongside consultations for expanding the HPL.
  • Indicate whether public commentary on the Revised Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill can be made and provide a deadline for comments.
  • Explain why a postponement of the increase is now considered an essentialrequirement to enable consultations to expand the levy and reduce the threshold, especially when the announcements made in the 2022 Budget indicated no conflict between the two processes.
  • Release the intended process for consultations, including timeframes andstakeholders, as soon as possible to ensure transparencyand help build public confidence and participation.

HEALA wrote an official letter to National Treasury dated 04 April 2022 to engage on this issue and made several attempts to follow up and secure a meeting with the Department to no avail.  

For media enquiries, contact:
Nzama Mbalati, HEALA
082 734 5414