Treasury urged to hold sugar tax steady
Sugar farmers are asking for the health promotion levy, commonly known as the sugar tax, not to be marginally increased in the February budget, claiming it causes economic hardship.
SA Canegrowers, which represents SA sugar farmers, says the tax decreases the demand for sugar and thus the revenue of thousands of smallscale farmers.
At the same time, SA Canegrowers pointed out that it reached its target of paying out R1bn over five years to smallscale and black farmers as part of transformation efforts.
The money comes from statutory industry levies paid by all growers and millers that are then redistributed.
But the farmers say that to offer continued assistance to small-scale farmers, they require the support of the government in ensuring the sugar tax does not increase.
The sugar tax was introduced in 2018 to reduce the consumption of sugar-sweetened beverages, typically fizzy soft drinks, based on modelling that it would reduce obesity and lifestyle diseases, which are costly for patients and the government’s health budget.
The tax equates to 2.21c per gram of sugar content that exceeds 4g per 100ml. The first 4g is tax-free.
The National Treasury proposed in 2022 that the sugar tax should increase marginally to 2.31c/g. It is not clear if this will occur in the 2024 budget on February 21.
But the farmers said on Wednesday they need support as they strive to transform. Future efforts to help smallscale farmers will be affected by the decisions taken in relation to the sugar tax, the industry said.
SA Canegrowers CEO Thomas Funke said, “the sugar tax remains a drain on the industry’s revenue and this would only be exacerbated by an increase in the tax”.
Health experts say the fact that beverage makers reformulated their drinks to include less sugar shows the sugar tax is working.
Programme manager Petronell Kruger from Heala, an NGO that brings together health groups, said the purpose of the health promotion levy is not simply to raise revenue for health interventions.
“Sugar-sweetened beverage taxes are also instituted to encourage reformulation of sugar products to include less sugar and to reduce sugar intake. We know that reformulation has occurred and that there is a reduction in sugary beverage purchases,” Kruger said.
She said the tax is crucial to help reduce lives lost to noncommunicable or lifestyle diseases, which are the cause of almost two-thirds of deaths in SA. She claimed a reduction in disease would save the department of health billions of rand.
Heala also stated that much of the trouble in the sugar industry is a result of fraud and not the taxes. “It is important for the public to understand that the issues of corruption in the sugar industry have been the real cause of harm within the sector,” Kruger said.
Tongaat Hulett, SA’s largest sugar producer, is in business rescue after fraud, which led to a R12bn hole in its accounts and debt it could not repay.