Assessing changes in non-alcoholic sugary beverage prices in Agincourt following South Africa's Health Promotion Levy: A pre- and post-implementation study.

BACKGROUND

Taxing sugar-sweetened beverages (SSBs) effectively reduces consumption when it leads to increased consumer prices and demand is sufficiently responsive, alongside other factors. Given the significant disparities in health outcomes between urban and rural provinces, this study to seeks to measure the changes in the prices of SSBs in rural South Africa and estimate the extent of the tax passthrough following the introduction of the Health Promotion Levy (HPL).

DESIGN AND METHODS

We employed pre-post regression analyses techniques using the 2023 HAALSI Nutritional Establishment survey data.

RESULTS

The results show that the HPL led to an increase in prices (in real terms), and the price increase was more than that of the HPL. On average, the price of carbonated beverages increased by ZAR2.24 per litre (95% CI: 1.65-2.83) post the introduction of the HPL. However, the price increase was only registered during the period the HPL was introduced. The tax passthrough for carbonates was estimated at 1.87, implying that the tax was overshifted to consumers.

CONCLUSIONS

This study shows that introduction of the HPL led to an increase in prices of carbonated beverages in Agincourt. The value of the HPL was however eroded over time by inflation. Considering that the effective tax burden of the HPL is substantially below the 20% minimum threshold recommended by the World Health Organisation, it is important that the government raises the HPL to maintain its value. Increasing the HPL is important to incentivise people to reduce SSB consumption.