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Publication of sugar tax increase without consultation threatens livelihoods 

SA Canegrowers has voiced concern about the recently published Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill, which includes an increase in the Health Promotion Levy (sugar tax), and is due to take effect on 1 April 2025. 

SA Canegrowers CEO, Dr Thomas Funke, said the government has repeatedly undertaken to consult sugar industry stakeholders on the effectiveness of the levy and its socio-economic impact on the sector. “The publication of the increase in the absence of consultation is a bad faith move by the National Treasury that will have far-reaching negative implications for the struggling industry … throughout the value chain,” he said.

The increase in the Health Promotion Levy was first announced in February 2022. Its implementation was postponed to 1 April 2023, for further engagement, but no consultation took place.

“In his Budget Speech in February 2023, Minister of Finance, Enoch Godongwana, announced the increase would be further delayed for a period of two years, recognising the difficult environment within which growers operate. However, since this announcement, no consultation with the industry has taken place.

“The Parliamentary Portfolio Committee on Trade Industry and Competition also scheduled a colloquium on the sugar tax … which was postponed following the announcement of the two-year pause on the increase and has yet to be rescheduled. The value of any future engagement in this regard with Parliament or government is called into question by the recently published Bill, as the publication suggests a predetermined outcome – an increase of the sugar tax.”

Funke said the publication of the increase without consultation is especially troubling since National Treasury has also failed to respond to a Promotion of Access to Information Act request by SA Canegrowers on the information relied upon by government on introducing the sugar tax and subsequent decisions to increase the tax. “The government has produced no data demonstrating the effectiveness of the Health Promotion Levy or to justify increasing the levy further.

“At the same time, the uncertain future faced by South Africa’s sugarcane growers is evident, especially considering that two mills are currently in business rescue. This hardship has been exacerbated by a hike in input costs even as irrigated growers continue to struggle with loadshedding and the implications of a potentially drier, hotter summer over the coming months.”

Funke added the tax on the sugar industry caused “tens of thousands” of job losses in its first year of implementation alone, costing the country more than R2 billion. Increasing the tax will therefore have catastrophic effects resulting in thousands more job losses and less cane being farmed in poor rural areas where poverty and unemployment are already at alarming levels.

Funke said SA Canegrowers will make a submission on the Bill calling on Godongwana to remove the increase from legislation until a fair engagement process has been concluded. “We will also call on the Minister to comply with SA Canegrowers’ PAIA request so industry engagements can be carried out with full information, and will write to the portfolio committee on Trade, Industry and Competition to request that the colloquium be re-scheduled urgently.

“SA Canegrowers is committed to protecting the one million livelihoods the industry supports, and to expanding opportunities for future generations. We cannot achieve this without the support of government. The first step must be the postponement of any increase in the sugar tax until meaningful consultation has taken place.”

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