Destructive’ sugar tax pushes industry to the brink

South Africa’s sugar industry is being pushed further into decline due to the sugar tax, according to the South African Farmers Development Association (Safda) and SA Canegrowers. The two organisations have issued an urgent appeal to the government, calling for the removal of the sugar tax or an extension of the moratorium on any tax increases until 2030.

This appeal comes amid concerns that the current sugar tax or health promotion levy (HPL) tax is driving 25 000 sugarcane farmers out of business, plunging hundreds of thousands of families into poverty. 

“We cannot allow the destructive sugar tax to kill the industry, which has been in recovery mode, thanks to phase one of the master plan,” the two industry bodies wrote in a joint statement.

“Actually, any increase to the HPL or lowering of the threshold would be tantamount to undoing all the great work and progress achieved under the auspices of the master plan,” the statement read.

Since the sugar tax was introduced in April 2018, it has had a devastating impact on the sugar industry.

The levy is said to have caused multi-billion-Rand revenue losses, and job cuts, and led to the permanent closure of two mills in KwaZulu-Natal.

No evidence sugar tax curbs lifestyle disease

According to a NEDLAC-commissioned study on the socio-economic impact of the HPL, the industry lost 13 536 jobs (12 860 farm jobs) by 2019, with 250 000 tonnes of sugar sales lost in its first year.

The sugar tax was introduced as part of a broader strategy to reduce the country’s high levels of obesity and related health issues, such as diabetes and heart disease.

The government aimed to encourage healthier consumption habits by taxing sugar-sweetened beverages. This initiative is in line with global efforts to combat non-communicable diseases linked to excessive sugar intake.

However, role players in the sugar industry argue that there is no credible evidence to show that the HPL has reduced obesity or diabetes.

“There is no credible research in South Africa and worldwide to show that sugar taxes work. Why then punish us as cane farmers who make a major economic contribution to deeply rural and job-starved areas of KwaZulu-Natal and Mpumalanga?” they added.

The joint statement from the organisations emphasised the importance of policy alignment among government departments to ensure the success of the 2030 master plan.