Sugar tax ‘may be final nail in the coffin’

Finance minister Tito Mboweni has been urged to ditch the controversial sugar tax, which was introduced in 2018 amid concern that it will wipe out SA’s sugar industry. The industry is reeling from the effects of the tax, which has cost it R1.5bn since its implementation.

The cane-growing sector alone lost about 9,000 jobs in the first year. Industry stakeholders say this number is climbing, and thousands more have been lost in the sugar-milling and beverage industries.

“The impact of the sugar tax on poor, rural communities is absolutely devastating,” said Rex Talmage, chair of the SA Cane Growers’ Association.

The sugar industry generates R14bn a year, and is responsible for at least 350,000 jobs.

The government introduced a tax on sugar-sweetened beverages in April 2018 as part of its efforts to improve the health of South Africans. The levy is 2.1c for every gram of sugar per 100ml above a 4g threshold.

The Treasury collected R3.4bn in the first year and expects R2.2bn more in 2019.

While the tax has been broadly welcomed by health experts and advocacy groups, it has left many producers counting their losses. The situation is worsened by low international prices and changing consumption patterns.

Talmage said the industry rejected “the reckless and heartless call” of lobby groups such as Healthy Living Alliance (Heala) “to increase the sugar tax further and expand it to other products”.

“We also challenge Heala to produce evidence that the sugar tax has had a positive impact on obesity levels in the country. The truth is that there is no data available at this time to tell us whether the tax has achieved its objective of improving health.

“However, what is crystal clear is the devastating impact this tax has had on the livelihood of small-scale growers, emergent farmers and thousands of workers living in rural communities,” Talmage said.

Heala said the sugary drinks tax will not only help prevent noncommunicable disease-related morbidity and mortality but will also increase revenue collection towards the health budget.

Talmage said the sugar tax “could very well be the final nail in the coffin for an industry that supports 1-million livelihoods”.