SA Canegrowers take the Treasury to task for missing deadline to give reasons for imminent sugar tax hike

SA CANE GROWERS lambasted the National Treasury last Thursday after it missed the deadline to respond to a Promotion of Access to Information Act (PAIA) application submitted the organisation to provide information relating to the Health Promotion Levy (HPL), or the sugar tax, and decisions to increase it. In his Budget speech in February 2022 Finance Minister Enoch Godongwana announced an increase in the levy, which was postponed to April 1, 2023.

Andrew Russell, the chairperson of SA Canegrowers, said that in the absence of any proof that the levy had been effective, and in light of the demonstrated economic destruction of the levy, SA Canegrowers called on Godongwana to not only reverse the decision to increase the levy, but to scrap the levy entirely.

“This is a matter of survival for sugar cane growers, for industry value chain stakeholders, and for the 1 million South Africans who rely on the industry for their livelihoods,” he said.

The organisation said the PAIA request was submitted on December 14, 2022, with a 30-day legislative deadline to respond.

The Treasury, when contacted for its response, said it could not comment by the time of going to print.

SA Canegrowers has been very vocal on the negative impact of the HPL at a time the industry is under financial pressure, exacerbated by load shedding. Last week data by SA Canegrowers showed that the South African sugar industry was set to lose R723 million in 2023 because of load shedding.

The country’s sugar industry is facing an uncertain future as in recent months, milling giant Tongaat Hulett has had its South African operations placed under business rescue.

Last year a report commissioned by the National Economic Development and Labour Council showed that in the first year of the sugar tax’s implementation, there were 16 621 job losses across the industry, of which 9 000 job losses were in the cane-growing sector alone. The report also highlighted that the sugar farming sector’s output had declined by a cumulative R414.2m by 2019 as a result of the sugar tax, while the sugar processing sector’s output had declined by a cumulative R772.1m by 2019.

Russell said yesterday that while the national government had indicated previously that the HPL was introduced to bring down obesity levels in the country, it had failed to date to produce any data to support this argument or to show that the tax has had any impact in this regard.

“What is clear though is the devastating economic impact the HPL has had on the sugar industry over the past few years, with thousands of jobs being lost and billions of rand in lost revenue,” he said.

Russell said as the implementation date for the increase drew near, the industry had yet to have any engagement with the government on the planned increase.

The sugar tax fight comes as general food prices in South Africa are rising because of the increased cost of production.

The January 2023 Household Affordability Index, by the Pietermaritzburg Economic Justice & Dignity Group, noted that white sugar prices had risen by 5%.

Meanwhile, Chris Engelbrecht, the chairperson of the Association of Southern Africa Sugar Importers, told Business Report last week that the import of sugar was not viable currently because of a high world price on sugar and oil and high shipping rates, all on top of the import duty of R1 946 per ton.

The world price of sugar was currently $555 (about R9 666) per ton, while its average price was normally around $430, he said.