SA sugar industry relieved by absence of sugar tax increases in MTBPS

SOUTH Africa’s sugarcane industry has welcomed the omitting of an increase of the health promotion levy (or the sugar tax) by the Minister of Finance Enoch Godongwana as part of the 2024 Medium Term Budget Policy Statement.

This follows back-and-forth views by the SA Canegrowers and the Healthy Living Alliance (HEALA) over the proposed doubling of the sugar tax on sugar-sweetened beverages and whether the introduction of the sugar tax has led to job losses in the sector.

Higgins Mdluli, chairman of SA Canegrowers on Thursday said they look forward to the promised consultation and working with the government to ensure that evidence-based policies that protect jobs and support rural communities are implemented.

“The sugar tax is not supported by evidence. Since its introduction, it has not promoted health outcomes in South Africa, but to the contrary destroyed jobs in areas that could ill afford it,” Mdluli said.

Godongwana on Wednesday said that on the revenue side, tax collection for 2024/25 was expected to be R22.3 billion lower than what we estimated in February.

“Over the next two years, the main budget revenue estimate has also been lowered by R31.2bn,” Godongwana said.

“In the absence of faster growth and in the face of external risks, tax revenue will remain under pressure, forcing us to make difficult decisions on where to spend.”

Chapu Chartered Accountants CEO, Ncumisa Mkunqwana said the MBTPS serves to give an update on the state of the economy and normally, the government introduces strategies on how to reach set targets that are at a risk of not being achieved.

“So normally there are no tax pronouncements made in the MTBPS stage,” Mkunqwana said.

SA Canegrowers on Thursday maintained its assertion that the sugar tax, implemented in April 2018, had cost 16,000 jobs in the first year it was implemented alone, and any increase would be devastating to growers who provide vital employment in rural areas, especially in Mpumalanga and KwaZulu-Natal.

The organisation requested that the government consult the entire sugar sector about its promised study on the socio-economic impact of the sugar tax and the study on dietary intake to understand all the causes of obesity and ill health, which do not just reduce a complex issue to one causal factor.

Meanwhile, the Association of Southern Africa Sugar Importers (ASASI) chairperson, Chris Engelbrecht welcomed the decision to refrain from increasing the sugar tax in this MTBPS.

Engelbrecht said this restraint was a positive development for the broader agricultural and allied industries as it supported stability and job security at a time when rural and urban businesses alike were striving to maintain sustainable employment levels.

BUSINESS REPORT