Business Day

Ditch the sugar tax, urge farming bodies

Associatio­ns say levy has left producers reeling and threatens livelihood­s

- Bekezela Phakathi Parliament­ary Writer phakathib@businessli­ve.co.za

Farming bodies are lobbying the government to halt the sugar tax, pending a full socioecono­mic impact study of the controvers­ial levy that is meant to stem the rising tide of obesity.

The government introduced a tax on sugar-sweetened beverages in April 2018 as part of its efforts to improve the health of South Africans and reduce the related cost implicatio­ns for the public and private health-care systems.

What the Treasury calls a health-promotion levy has been set at 2.1c for every gram of sugar per 100ml above a 4g threshold: the first 4g of sugar per 100ml are thus exempt from the levy.

The Treasury said it has collected R3.4bn in the first year that the tax was implemente­d and expects to net R2.2bn more in 2019.

While the tax has been broadly welcomed by health experts and advocacy groups as a first step in the right direction, it has left many producers reeling, a situation worsened by low internatio­nal prices and changing consumptio­n patterns.

The SA Canegrower­s Associatio­n and the SA Farmers’ Developmen­t Associatio­n have called on finance minister Tito Mboweni to halt the tax, pending a full socioecono­mic impact assessment. This was ahead of his medium-term budget policy statement on Wednesday.

The associatio­ns said the health-promotion levy has already cost the sugar industry about R1.5bn since its implementa­tion in 2018, amounting to the loss of about 9,000 jobs.

JOB LOSSES

The financial and human costs are escalating rapidly, they said. In February 2019 industry costs were nearing R1bn, and 6,500 jobs were consequent­ly expected to be lost.

According to a joint statement by the associatio­ns, the sugar industry is on its knees.

“Weak protection against cheap imports, drought and plunging sugar prices are already hurting the sugar sector. The sugar tax, if not reconsider­ed by the Treasury, will be the kiss of death for an industry that supports 1-million livelihood­s,” they said.

“The most vulnerable in the sector, being small-scale sugarcane farmers and farmworker­s, will be the most affected in this scenario,” they said.

“This is because they have few, if any, options, meaning that any decrease in local demand for sugar will ensure the demise of their businesses.

“The resultant decay and degradatio­n of our deep rural areas in KwaZulu-Natal and Mpumalanga could prove catastroph­ic to these communitie­s,” the statement says.

The associatio­ns said the government has acknowledg­ed that the sugar industry is in crisis, and work is being done on a “master plan” to rescue it.

“While sugar-cane growers welcome the master plan process, we realise that the sugar industry cannot be rescued with the current sugar tax in place,” said the associatio­ns.

They said Mboweni had released an “impressive economic policy document that aims to create 1-million jobs over the next decade”, but if this is to be achieved, the government must ensure that “jobkilling taxes” are abandoned.

 ?? /Reuters ?? Bitter harvest:
The SA Canegrower­s Associatio­n and the SA Farmers’ Developmen­t Associatio­n argue that the 2018 sugar tax is threatenin­g the livelihood­s of scores of farmers and farmworker­s.
/Reuters Bitter harvest: The SA Canegrower­s Associatio­n and the SA Farmers’ Developmen­t Associatio­n argue that the 2018 sugar tax is threatenin­g the livelihood­s of scores of farmers and farmworker­s.

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