Budget 2026 a chance to boost ‘sugary drinks tax’, cut costs and save lives

As South Africa approaches this year’s budget speech (25 February 2026) , much attention is being paid to unemployment, national debt and inequality.

Yet one tax, which has the potential to improve the lives of South Africans, particularly the poorest, receives little attention.

The Health Promotion Levy, commonly called the sugary drinks tax, was introduced in 2018 with a clear objective: reduce excessive sugar consumption with a view to reducing obesity and associated non-communicable diseases (NCDs) like diabetes and hypertension. When the levy was adopted, it worked. A United Nations University World Institute for Development Economics Research study released in 2025 noted that the levy led to an increase of 15% in the consumption of non-taxable sugary drinks.

Not only did the tax work, it prevented some of the most expensive and debilitating diseases that, if left untreated and unmanaged, can have serious implications for a person’s ability to work and earn a livelihood. Treating NCDs, particularly at an advanced stage, is incredibly expensive and burdensome on the healthcare system. In contrast, preventing these diseases can be very cost-effective and, if backed by the right policies like the Health Promotion Levy, can even generate income for the government to further improve health.

It is important to recognise that NCDs do not affect all communities equally. NCDs disproportionately affect the poor, particularly black women. This is not an accident, the unhealthy foods and sugary drinks that cause obesity and NCDs are often heavily advertised to poorer communities and relied on as a cheap source of calories.

Boost for most vulnerable

Studies evaluating the levy confirm that it is these same low socioeconomic status groups that benefit the most of the levy and saw the biggest changes in the consumption of sugary drinks after the tax was introduced. All of this shows that the levy is not just a tax, but a public health intervention that aims to help the most vulnerable in our society.

Over recent budget cycles, the levy has drifted away from public focus. It is a fixed tax and, if it is not increased each year it is effectively eroded by inflation. When the levy was newly adopted, increases kept up with inflation, but recent years have seen the rate fixed and have even seen moratoriums placed on increasing the tax.

These decisions have often been the result of lobbying from the sugar industry, which claims that the levy has caused job losses. We now know this claim is untrue. The levy has not caused job losses in the sugar industry.

More importantly, we must understand that a weaker Health Promotion Levy doesn’t save us money, it merely changes who pays the costs. If strengthened, the levy has the potential to save the country millions of rand by preventing illness and disability. When the government hesitates to maintain or strengthen the levy, the financial burden caused by these diseases does not disappear: it is transferred. The cost shifts from the beverage industry to public clinics already operating beyond capacity, to families forced to absorb chronic care expenses, and to workers whose income disappears as their health deteriorates. In 2018, it was estimated that it cost R21.8-billion annually to treat NCDs in the public health sector; this amount it is projected to be R35.1-billion by 2030.

Inequality is the central, but often unspoken, issue when the the levy is debated.

Poorer communities find cheap, ultra-processed foods and sugar-sweetened drinks everywhere, while affordable fresh produce and preventative healthcare are scarce. In these communities what is eaten is no longer a “choice”, but is shaped and limited by price, proximity and relentless marketing. While we recognise that cost-of-living pressures are genuine, a weaker levy does not fix the problem. A marginal increase in the price of a soda is a small price to pay for preventing debilitating illness.

Reinforcing inequality

Weakening public health measures like the levy doesn’t address inequality, it reinforces it. A stagnant or weakened levy ultimately enables the continued targeting of vulnerable communities by industries whose profits depend on high levels of sugar consumption.

The question is not simply who pays at the till, but who pays over a lifetime. When disease risk falls, healthcare costs decline, productivity increases and families avoid catastrophic expenditures. The true regressivity lies not in a sugar tax but in allowing preventable illness to flourish among the most vulnerable.

When the levy fades from attention in the national Budget and is eroded by inflation, inequality deepens. Public interest become weaker while commercial interests continue to shape what we eat and, in turn, our health.

Globally, the sugar industry faces mounting uncertainty and diminishing returns due to myriad challenges. The local market can no longer sustainably rely on the overconsumption of sugar to remain viable. The costs, both to individual health and our national health system, are simply too high to justify continued support of this struggling industry.

However, much can be done to protect farmers while simultaneously addressing critical nutritional needs. Instead of granting extensions and moratoriums to the sugar industry, the government should facilitate new opportunities for farmers to supply affordable, nutritious produce to Early Childhood Development (ECD) centres across the country.

This approach would achieve multiple objectives: it would provide farmers with sustainable alternative income streams, ensure children receive healthy and nutritious food during their most critical developmental years, and reduce the burden on our healthcare system by investing in prevention rather than treatment.

The solution is clear

The solution is clear: redirect support from an unsustainable industry toward building relationships and supply chains that nourish our children and secure our farmers’ futures

The levy is not a cure-all. It cannot, on its own, dismantle structural inequality or transform the food system. But it is a foundational measure that signals whether prevention and equity are priorities. Allowing the levy to stagnate steadily erodes both its deterrent effect and its potential to help improve the health of South Africans.

The call for a strong Health Promotion Levy is not about just about taxes and government revenue, it is recognising that improving public health is a matter of equality. DM

Nzama Mbalati is the CEO of the Heala (Healthy Living Alliance) and Zukiswa Zimela is the Communications Manager at Heala.