SA Canegrowers welcomes the announcement by the DA that they are calling for a repeal of the sugar tax, officially known as the Health Promotion Levy. Since its implementation in 2018, the sugar tax has placed significant strain on the sugar industry and especially sugarcane growers, without delivering measurable public health benefits. The unintended consequences of the sugar tax have exacerbated economic hardships in rural and agricultural communities, especially in Mpumalanga and KwaZulu-Natal.
“We are encouraged by the recognition that the tax has done more harm than good,” said Higgins Mdluli, the chairman of SA Canegrowers. “Repealing the sugar tax will restore much-needed competitiveness to the sugar industry, bolster job security in rural economies, and provide relief to the thousands of families whose livelihoods depend on sugarcane farming.”
SA Canegrowers represents 24,000 small-scale and 1,200 large-scale growers across KwaZulu-Natal and Mpumalanga.
The sugar tax was introduced in 2018, and in the first year alone more than 16,000 jobs were lost across the sugar industry according to a study by Nedlac. Yet not one piece of evidence has been provided showing it has any positive impact on health or obesity outcomes. A repeal of the sugar tax by Treasury – as asked for by the DA – would align with the Government of National Unity’s broader economic goals of driving inclusive economic growth and creating jobs.
Small-scale growers without economies of scale feel the most impact of demand-suppressing policies such as the sugar tax. Growers such as these are often vital sources of employment and stability in rural areas, where other employment opportunities are scarce.
Both large- and small-scale growers also experience the impact of the tax when seeking financing. Banks and lenders factor in the instability that the sugar tax causes to the industry when issuing loans to canegrowers and lend money at a higher interest rate. Higher premiums impact growers’ ability to invest and grow their businesses, putting another unintended dampening effect on the industry.
“We urge the Treasury and policymakers to prioritise rural jobs and stability, while crafting evidence-based policies that support industries integral to the country’s socio-economic well-being,” said Mdluli.
