Industry association the South African Canegrowers has called on Finance Minister Enoch Godongwana to scrap the Health Promotion Levy (HPL) – also called the sugar tax – to enable the Sugar Industry Value Chain Masterplan to succeed.
In June 2021, a study commissioned by the National Economic Development and Labour Council (Nedlac) showed that, in the first year of its implementation, the sugar tax contributed to 16 621 jobs losses, a R653-million decline in investment into the economy, and a R1.19-billion decline in the sugar industry’s contribution to South Africa’s gross domestic product. Cumulatively, the tax cost South Africa more than R2-billion, the association said on November 10.
Further, the sugar tax was introduced in 2018 with the goal of reducing obesity in the country.
"However, there is little to no evidence that the tax has achieved this goal. The recently published South African National Health and Nutrition Examination Survey reveals that more than half of South Africans gained weight over the past year," SA Canegrowers said.
"If the government is serious about ensuring the long-term sustainability of the sector and protecting the one-million livelihoods it supports, it must do away with the job-killing sugar tax," added SA Canegrowers chairperson Andrew Russell.
The Sugar Industry Value Chain Masterplan was developed by government, industry stakeholders, retailers and social partners and signed on November 17, 2020, to tackle the major challenges facing the industry and ensure its survival and long-term sustainability.
However, the success of the masterplan continues to be threatened by the devastating impact of the sugar tax on revenue and employment in the industry, Russell said.
Godongwana will be delivering the Medium Term Budget Policy Statement on November 11 against the context of record levels of unemployment in the country.
"Given the lack of evidence for the effectiveness of the tax, and its destructive impact on employment in the sugar industry, SA Canegrowers calls on Godongwana to scrap the sugar tax while the Department of Health investigates the impact of the tax on obesity levels in South Africa over the past three years.
"SA Canegrowers remains steadfast in its commitment to the success of the masterplan, and is working with government and industry stakeholders to revive and grow the sugar industry. With support from Godongwana, we can save the sector, protecting the one-million livelihoods that depend on it and ensure the expansion of opportunities for future generations," the association said.