SA Canegrowers want sugar tax scrapped

SA Canegrowers has made a submission to the National Treasury calling on Minister Enoch Godongwana to not only suspend the increase in the sugar tax, but to eliminate the tax entirely.

The canegrowers association said this is in light of the crisis in which the South African sugar industry finds itself and the fact that to date, there is no evidence that the tax has had a positive impact on obesity levels in the country.

The submission was made pursuant to a call for comments on the Budget Review 2023 issued by the National Treasury in November 2022.

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SA Canegrowers made a similar submission to the National Council of Province’s Select Committee on Finance in response to a call for comments on the 2022 Rates and Monetary Amounts and Amendment of Revenue Laws Bill in the same month.

These calls for comment came shortly after the board at Tongaat Hulett decided to put the company’s South African operations into business rescue.

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The association said Tongaat Hulett alone serves more than 12 000 growers who employ more than 14 000 farm workers in KwaZulu-Natal’s rural communities.

“This season, Tongaat Hulett operations is estimated to crush over 4,78m tons sugarcane, which is valued at about R3,23 billion. This is vital revenue that neither the industry, province, nor national economy can afford to lose.

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“The sugar industry is structured such that there is one revenue pot from which growers and millers all receive a share. It is therefore impossible to isolate the consequences of any hardship to one section of the industry; when millers suffer, growers suffer and vice versa,” said the association in a statement.

The association said there is currently a grower-led consortium seeking to save Tongaat Hulett operations.

“This will be difficult enough to accomplish with the sugar tax handicapping the industry; it will be virtually impossible if the sugar tax is increased. And Tongaat Hulett is not the only milling company under pressure.

“SA Canegrowers has long pointed to the financial pressure the sugar tax places on the entire industry. The industry is therefore rightly concerned that the continued implementation of the sugar tax may yet cause further casualties in the milling sector. Two sugar mills have already closed, with devastating consequences for the entire sugar value chain and the one million mostly rural livelihoods it sustains.’

Moreover, under the terms of the Sugarcane Value Chain Masterplan, the association said the industry is constrained in the price increases it can put on its product.

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The SA Canegrowers has called on Minister Godongwana to help the industry in this time of crisis and to help them save the one million livelihoods it supports.

“We remain committed to working with government to develop a holistic plan that identifies the causes of obesity in the country and provides solutions that tackle this problem without destroying one sector of the economy.”