Egypt sugary drink tax could save $1.8 billion in healthcare costs

Egypt sugary drink tax could save $1.8 billion in healthcare costs

A targeted excise tax on sugar-sweetened beverages in Egypt could avert hundreds of thousands of cases of obesity and diabetes while saving the national healthcare system US$1.8 billion over 25 years, according to a new modelling study.

The research, conducted by health economists including Lennert Veerman and Yohani Dalugoda, suggests that increasing the consumer price of sugary drinks by 20% — the minimum level recommended by the World Health Organization — would create a ripple effect of health improvements across the population. This price hike would likely reduce consumption, leading to lower caloric intake, reduced average body weight, and a subsequent drop in obesity-related diseases.

Egypt currently applies a general 14% sales tax to all drinks and a general excise tax on non-alcoholic beverages, but it lacks a specific tax targeting sugary drinks. The burden of non-communicable diseases (NCDs), such as heart disease, stroke, diabetes, and cancer, is already severe in the country, accounting for 84% of all deaths. Furthermore, adult obesity rates in Egypt rose from 22% to 32% over the last two decades.

Projected Health and Economic Gains

The study utilized a proportional multi-state life table model to track disease through the population over time. Based on 2019 baseline data, the model projects that a 20% tax over 25 years could prevent:

• 350,000 cases of obesity
• 250,000 cases of type 2 diabetes
• 56,000 cases of heart disease
• 39,000 strokes
• 2,700 new cancer cases
• 30.9 million instances of tooth decay

These health improvements translate to an estimated 1.6 million additional health-adjusted life years (HALYs) across the lifetime of Egypt's current population. To provide context, this is in the same order of magnitude as the projected 883,000 life years saved by Egypt's national campaign to screen and treat hepatitis C between 2018 and 2030.

Economically, the US$1.8 billion in savings represents roughly 8% of Egypt's entire health budget in a single year. The researchers noted that these figures are conservative, as they only include direct healthcare costs and exclude indirect economic losses such as reduced productivity and lost wages due to illness.

Demographic Impacts and Regional Context

The benefits of such a tax would not be distributed equally. Young Egyptians are expected to benefit the most because they consume more sugary beverages and are more responsive to price changes. Women are projected to gain approximately 11% more healthy life years than men, a result of higher obesity rates among Egyptian women and a greater sensitivity to added sugars.

Egypt's situation reflects a broader trend across Africa. Between 1990 and 2022, obesity rates in sub-Saharan Africa rose from 9% to 23% for men and 17% to 39% for women. South Africa has already implemented a Health Promotion Levy on sugary beverages since 2018, which resulted in a 32% reduction in purchases among lower-income households and a 27% reduction among higher-income households.

The financial strain of obesity is already evident in other regions; in 2019, obesity in South Africa cost an estimated US$7.6 billion, a figure projected to reach US$42 billion by 2060.

Study Limitations and Future Outlook

The researchers acknowledged certain limitations in their model. Because they relied on international data rather than Egypt-specific surveys for price sensitivity, consumers might respond differently than projected. The model also cannot account for "substitution," where consumers might switch to cheaper sugary drinks instead of reducing their overall sugar intake.

The authors argue that while a tax is not the only solution to the NCD crisis, it is a cost-effective tool. The study concludes that the evidence for the effectiveness of such taxes is established; the remaining hurdle is whether the political will exists to implement them.