Sugar crisis: Minister Godongwana must scrap the sugar tax for the Masterplan to succeed

10 November 2021  

Ahead of Minister Godongwana delivering his Medium Term Budget Policy Statement (MTBPS) tomorrow, 11 November 2021, SA Canegrowers calls on him to scrap the Health Promotion Levy (HPL or sugar tax).

Minister Godongwana will be delivering his MTPBS against the context of record levels of unemployment in the country.  His address also comes six days before the one-year anniversary of the Sugar Industry Value Chain Masterplan. If the government is serious about ensuring the long-term sustainability of the sector and protecting the one million livelihoods it supports, it must do away with the job killing sugar tax. 

The sugar tax was introduced in 2018 with the goal of reducing obesity in the country. However, there is little to no evidence that the tax has achieved this goal. In fact, the recently published South African National Health and Nutrition Examination Survey reveals that more than half of South Africans gained weight over the past year.

However, in June 2021 a study commissioned by the the National Economic Development and Labour Council (NEDLAC) showed that in the first year of its implementation, the tax caused 16,621 jobs losses, a R653 million decline in investment into the economy, and a R1,19 billion decline in the sugar industry’s contribution to the South Africa’s Gross Domestic Product. Cumulatively, the tax cost South Africa more than R2 billion.

17 November will mark the one-year anniversary of the Sugar Industry Value Chain Masterplan, which was developed by government, industry stakeholders, retailers and social partners to tackle the major challenges facing the industry and ensure its survival and long-term sustainability. Sadly, the success of the Masterplan continues to be threatened by the devastating impact of the sugar tax on revenue and employment in the industry.

Given the lack of evidence for the effectiveness of the tax, and its destructive impact on employment in the sugar industry, SA Canegrowers calls on Minister Godongwana to scrap the sugar tax while the Department of Health investigates the impact of the tax on obesity levels in South Africa over the past three years. 

SA Canegrowers remains steadfast in its commitment to the success of the Masterplan, and to working with government and industry stakeholders to revive and grow the sugar industry. With support from Minister Godongwana, we can save the sector, protecting the one million livelihoods that depend on it, and ensuring the expansion of opportunities for future generations.

Issue by Andrew Russell, Chairman of SA Canegrowers, 10 November 2021