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Cane growers call on Enoch Godongwana to scrap sugar tax when delivering his first Medium-Term Budget Policy Statement

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, says SA Canegrowers. Photo: Armand Hough.

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, says SA Canegrowers. Photo: Armand Hough.

Published Nov 10, 2021

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AS FINANCE Minister Enoch Godongwana delivers his Medium-Term Budget Policy Statement (MTBPS), the SA Canegrowers has called on him to scrap the Health Promotion Levy (HPL), or sugar tax, to ensure that the sector’s masterplan succeeds.

SA Canegrowers chairperson Andrew Russell said Godongwana would be delivering his MTPBS in the context of record levels of unemployment in the country.

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“His address also comes six days before the one-year anniversary of the Sugar Industry Value Chain Masterplan. 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,” Russell said.

The sugar tax was introduced in 2018 with the aim of reducing obesity in the country. However, SA Canegrowers said there was little or no evidence that the tax had achieved this goal. Russell said the recently published South African National Health and Nutrition Examination Survey, in fact, revealed that more than half of South Africans had gained weight over the past year.

“However, in June 2021 a study commissioned by the the National Economic Development and Labour Council (Nedlac) showed that in the first year of its implementation, the tax caused 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 the gross domestic product. Cumulatively, the tax cost South Africa more than R2bn,” Russell said.

November 17 will mark the one-year anniversary of the Sugar Industry Value Chain Masterplan, which was developed by government, industry stakeholders, retailers and social partners to tackle the major challenges facing the industry and ensure its survival and long-term sustainability.

However, SA Canegrowers said it was sad that the success of the masterplan continued to be threatened by the devastating impact of the sugar tax on revenue and employment in the industry.

“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 Minister 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,” Russell said.

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SA Canegrowers said it remained steadfast in its commitment to the success of the masterplan and to working with the government and industry stakeholders to revive and grow the sugar industry. According to it, with support from Godongwana, they could save the sector, protect the one million livelihoods that depend on it and ensure the expansion of opportunities for future generations.

Last month, the South African Farmer Development Association (Safda) said the sugar-cane industry was well worth protecting and the government should consider the fact that the industry did not only provide jobs but was also crucial to many manufacturing processes, earned the country much-needed foreign currency and was crucial in the fight against Covid-19 as it provided raw material for personal protection equipment.

Safda’s executive chairperson, Dr Siyabonga Madlala, said at the time that the call on the government to increase the sugar tax happened with very little consideration of what this might mean for the sector and livelihoods. He said while an increased sugar tax would affect the entire industry, including the secondary and tertiary industries, the small cane growers would suffer the most.

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In a media engagement held by the South African Sugar Association (Sasa) last month, the association’s executive director, Trix Trikam, said sugar tax was among the challenges faced by the industry.

In the first year of its implementation, the 2018/19 season, 250 000 tons of sales to the beverage sector were lost, with the industry experiencing a loss of at least R1.2bn in revenue.

Sasa said the ideal solution would be to remove the sugar tax. Trikam, however, was pessimistic that this would happen but he hoped that the levy would not be extended to other products.

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