Sugar Crisis: Canegrowers urge Mboweni to rethink Sugar Tax

18 February 2019

The SA Canegrowers can today reveal that the sugar tax (or health promotion levy) has cost the sugar industry nearly R1 billion since its implementation on 1 April 2018.

We call 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.

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% (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.

The sugar tax has dealt a huge blow to an industry struggling with the impact of drought, plunging sugar prices and weak protection against cheap imports. And it is 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.

The sugar tax’s positive impact on obesity is questionable, but its negative impact on the economy and jobs is certain. And while it may 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.

Issued by Graeme Stainbank, Chairperson of Canegrowers Association, 18 February 2019