Consider this Mboweni: Sugar tax costs industry R925m since inception
CAPE TOWN – The South African Canegrowers Association on Monday revealed that the sugar tax (or health promotion levy) has cost the sugar industry nearly R1 billion since its implementation on April 1, 2018.
The association called on Finance Minister Tito Mboweni to use the opportunity of his maiden budget speech on Wednesday to shelve the sugar tax, pending a thorough assessment of its impact on the economy and jobs.
The association’s chairperson Graeme Stainbank said: “According to our data, the sugar tax has so far cost the industry R925 million in the 2018/19 season (which runs from 1 April to 31 March), with 64 percent (R592 million) incurred by sugar cane growers.
“This translates into potential job losses of 6 500 in the cane growing sector alone and does not include further job losses in the sugar milling and beverage industries.”
Stainbank said the sugar tax had dealt a huge blow to an industry struggling with the impact of drought, plunging sugar prices and weak protection against cheap imports. And it was particularly devastating to farmworkers, land reform farmers and small-scale growers.
Before the implementation of the sugar tax, the sugar industry repeatedly warned the government about diminishing revenue and job losses.
“Now that the sugar tax has been in place for a year, we are in a position to assess its actual impact for the first time: nearly R1 billion in reduced revenue and thousands of jobs at serious risk.
“Evidence that the sugar tax has had any discernible impact on public health, on the other hand, is thin on the ground. We believe that the impact of the sugar tax on the obesity epidemic has been minimal. This is because obesity is a multifaceted problem with many causes, including increasingly sedentary lifestyles and a growing reliance on cheap and highly calorific junk food,” said Stainbank.
He said the sugar tax’s positive impact on obesity was questionable, but its negative impact on the economy and jobs was certain. And while it might bring in tax revenue, this comes at a huge cost to the industry and those employed by it.
“We call on Minister Mboweni to use his budget speech on Wednesday to acknowledge that the sugar tax is doing serious damage to the economy and that it will be put on hold pending a thorough economic impact assessment of it.
“If the government wants to achieve President Ramaphosa’s goal of creating 275 000 additional jobs this year, it needs to be bold and decisive. Scrapping the sugar tax pending a review would be a strong step in the right direction,” said Stainbank.
The sugar industry growers are calling for President Cyril Ramaphosa’s intervention in an effort to help save the multibillion-rand sector from imminent collapse.
The distress signal comes after grain farmers recently embarked on a drive to raise at least R3 billion to assist maize producers affected by drought.
Stainbank said the country’s sugar sector was in an unprecedented state of crisis adding that the R14bn industry was at risk of collapse, along with the 350 000 jobs it provided and the 1 million people it supported.
BUSINESS REPORT ONLINE