Sugar industry urges Tito to drop tax


Finance minister Tito Mboweni has been urged to ditch the controversial sugar tax which was introduced in 2018 amid concerns that it will wipe out SA’s sugar industry.

Minister of finance Tito Mboweni presents the medium-term budget policy statement in the National Assembly on October 30 2019.

The industry is reeling from the effects of the tax that has cost it R1.5bn since its implementation.

The cane growing sector alone has lost about 9,000 jobs in the first year. Industry stakeholders say this number is climbing, and thousands more have been lost in the sugar-milling and beverage industries.

“The impact of the sugar tax on poor, rural communities is absolutely devastating,” said Rex Talmage, the chair of the SA Cane Growers’ Association.

The local sugar industry generates about R14bn a year and is responsible for at least 350,000 jobs.

The government introduced a tax on sugar-sweetened beverages in April 2018 as part of its efforts to improve the health of South Africans, and to try to reduce the related costs for the public and private health care systems.

What the Treasury calls a health-promotion levy has been set at 2.1c for every gram of sugar per 100ml above a 4g threshold: the first 4g of sugar per 100ml are thus exempt from the levy.

The Treasury said it collected R3.4bn in the first year and expected to net R2.2bn more in 2019.

While the tax has been broadly welcomed by health experts and advocacy groups as a first step in the right direction, it has left many producers counting their losses. The situation is worsened by low international prices and changing consumption patterns. A drop in sales volumes and stiff competition from cheap imports, mainly from Brazil, have also hurt producers.

Talmage said the industry rejects “the reckless and heartless call of lobby groups such as HEALA (Healthy Living Alliance) to increase the sugar tax further and expand it to other products. The people who run these organisations clearly do not understand the hardships that so many rural people face.”

“We also challenge HEALA to produce evidence that the sugar tax has had a positive impact on obesity levels in the country. The truth is that there is no data available at this time to tell us whether the tax has achieved its objective of improving health.”

“However, what is crystal clear is the devastating impact this tax has had on the livelihoods of small-scale growers, emergent farmers and thousands of workers living in rural communities,” Talmage said.

HEALA has stated that the sugary drinks tax will not only help prevent non-communicable disease-related morbidity and mortality but will also increase revenue collection towards the health budget.

“HEALA will continue to advocate for the South African government to urgently increase the Health Promotion Levy to 20% as the required recommended threshold.”

Talmage said the sugar industry was already struggling as a result of weak protection against cheap imports, drought and plunging sugar prices.

“The sugar tax could very well be the final nail in the coffin for an industry that supports one million livelihoods. If Minister Mboweni is serious about ensuring inclusive economic growth and job creation, he will use his budget speech to halt the sugar tax until a full socio-economic assessment of its impact has been undertaken.”


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