Tax challenge for Small-scale cane growers

S ACanegrowers is calling on Finance Minister Enoch Godongwana to provide a signal on the future of the health promotion levy (HPL). With high input costs already weighing down the agricultural sector, the added burden of the HPL on the sugar industry poses an existential threat to SA’s 21 000 small-scale growers and must be eliminated. At his budget speech in February, Godongwana announced an increase in the tax, but this was subsequently postponed to April 2023 to allow for further consultation on lowering the four-gram threshold and extending the levy to fruit juices.

Prolonged

While this postponement provided some relief for growers, the prolonged enforcement of the HPL has continued to hamstring the industry, which has also been faced with other cost pressures, including a spike in fertiliser and energy prices along with ongoing bouts of load shedding.

While SA Canegrowers has written to Minister Godongwana to request a meeting to discuss the HPL, they have received no response to date. They have also written to President Ramaphosa requesting his intervention in this long-running problem to provide desperately needed relief for the industry by eliminating the sugar tax.

The tax was introduced in 2018 with the objective of reducing obesity levels in the country, so as to reduce the burden of disease on the country’s healthcare system.

Force

Despite being in force for more than four years, there remains no credible evidence that the intervention has reduced obesity levels in the country.

But the economic impact of the tax has been consistently demonstrated by credible research. According to the SA Canegrowers, a study commissioned in June 2021 by the National Economic Development and Labour Council showed that the tax had cost the country 16 621 job losses, a R653 million decline in investment into the economy, and a R119 billion decline in the first year of its implementation.