Taxes on tobacco, alcohol and sugar sweetened beverages: Linkages and lessons learned

Abstract

Increased consumption of sugar-sweetened beverages (SSBs) has been linked to increases in obesity in both high-income and low- and middle-income countries. Tobacco and alcohol taxes have proven to be effective tools to reduce tobacco and alcohol use. Many public health advocates propose using similar taxes to reduce consumption of SSBs. South Africa is a middle-income country that is considered a leader in the area of tobacco tax policy. A case study of tobacco and alcohol taxes is used to better understand optimal tax structures for SSBs. The case study tracks aggregate data over time on taxes, prices, consumption, tax revenues, and marketing expenditures at the brand level. Tobacco and alcohol taxes are shown to be effective in reducing the demand for tobacco. Additionally, taxes on the dose of alcohol rather than the volume of the beverage may incentivize producers to reduce the volume of alcohol in beverages through the supply side. While specific taxes based on the volume of beverages are likely to reduce the demand for SSBs, policy makers should also consider taxes on alcohol and SSBs that tax the dose of the alcohol and calories in order to create supply-side incentives for producers to lower alcohol and calorie levels in existing products or promote products with lower levels of alcohol and calories.

Keywords: Alcohol; South Africa; Sugar-sweetened beverages; Tax; Tobacco.