12-month delay in sugar tax implementation a relief for cane industry

SA Canegrowers has welcomed the 12-month delay on the planned increase of the Health Promotion Levy (HPL) or sugar tax. 

The sugar tax increase from R2.21 to R2.31 cents per gram of sugar was announced in Finance Minister Enoch Godongwana’s budget speech in February and was expected to come into effect on Monday 4 April 2022.

“The delay is a welcome reprieve for South Africa’s growers, especially small-scale growers,” said SA Canegrowers Association in a statement.

“In the first year of its implementation alone, the sugar tax cost South Africa more than 16,000 jobs and R2,05 billion,” added SA Canegrowers. 

The health promotion levy has wreaked havoc on the sugar industry and critics argue that the government failed to produce evidence that the sugar tax has had an impact on bringing down obesity levels in the country since being introduced in 2018.

“Modelling commissioned by SA Canegrowers with the Bureau for Food and Agricultural Policy (BFAP) shows that maintaining the sugar tax at the current level will still cost the industry a further 15,984 seasonal and permanent jobs,” said the organisation.

“It will be a major contributing factor towards a decline of 46, 600 hectares of area under cane over the next ten years,” it added. 

The organisation argues that there would have been increased job and revenue losses if the planned increase had gone ahead as planned.

The increase would have exacerbated challenges already facing the industry because of rising input costs including price hikes in fuel, which is currently 40% above the price in March 2021, and is expected to go a lot higher.

Fertiliser costs have also increased by more than 160% when compared to last year, according to the association.

“While today’s announcement provides some short-term relief to growers, it is critical that government focuses on assessing the long-term implications of keeping the tax in place,” pleaded SA Canegrowers.

The organisation plans to continue engaging the government and wants further research into the impact of the tax on obesity levels, jobs and revenue from 2018 to date.

“SA Canegrowers remains committed to the protection of the one million livelihoods that the sugar industry supports and to the success of the Sugar Cane Value Chain Masterplan.” 

“We believe the only way to achieve this is to scrap the sugar tax entirely and to implement a holistic approach to health that takes into account all of the factors that contribute to obesity in South Africa,” the organisation concluded.

Compiled by Narissa Subramoney

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