By Lloyd Phillips
Stakeholders within South Africa’s sugarcane value chain have wasted no time in using the startling postponement of the national budget speech, which is now scheduled for delivery on Wednesday, 12 March, to publicise and explain their vigorous opposition to the long-controversial Health Promotion Levy, or sugar tax.
Supporters of the sugar tax have also used the opportunity to publicly encourage Finance Minister Enoch Godongwana to actually increase and expand this tax, which was implemented on 1 April 2018, ostensibly to counter South Africa’s growing obesity problem and the associated non-communicable diseases, like diabetes.
Susan Goldstein is an associate professor in the South African Medical Research Council Centre for Health Economics and Design Science – Priceless SA at the University of the Witwatersrand. She recently published an opinion piece titled “Sugary drinks are a killer: a 20% tax would save lives and rands in South Africa” on The Conversation website.
Goldstein cites various reports to motivate her call to Godongwana to prioritise increasing South Africa’s sugar tax from the approximately 8% currently to 20%.
“Despite the sugar industry’s claims that the Health Promotion Levy is ineffective, global evidence strongly suggests otherwise. Sugar-sweetened beverage taxes have been implemented in 103 countries and territories globally, and have shown to be effective in many countries.”
Goldstein says studies have shown that since the implementation of South Africa’s sugar tax seven years ago, purchases of sugar-sweetened beverages have been declining.
‘The sugar tax is working’
“Mean sugar from taxable beverage purchases fell from 16,25 grams per capita per day from the pre-Health Promotion Levy [implementation from 1 April 2018] to 10,63 grams per capita per day in the year after [its] implementation.”
Goldstein writes that “our research” contradicts the South African sugarcane value chain’s frequent long-time argument that the sugar tax has led to “massive job losses” within this value chain.
She states that overweight and obesity are costing South Africa’s health system R33 billion annually, or R2 769 per person.
“Beyond raising funds, a higher [sugar] tax rate would provide public health benefits and savings for health services.”
Stakeholders in South Africa’s sugarcane value chain are maintaining their strong objections to calls for increases to the sugar tax.
More socio-economic harm than good
A recent statement by the South Africa Sugar Association (SASA) has again highlighted that, since its inception, the sugar tax directly caused the permanent closure of two sugar mills and lost the sugarcane value chain many billions of rands in income. An increased sugar tax “would decimate sugarcane farmers, including the 24 000 small-scale growers, and precipitate further closures of sugar mills.”
“Any increase in the sugar tax would literally undo all the progress and reverse the gains made under the all-important Sugarcane Value Chain Master Plan to 2030,” says advocate Fay Mukaddam, SASA’s independent chairperson.
Mukaddam refers to the findings of the report “Potential impact of an increase in the current level of the Health Promotion Levy”, compiled by the Bureau for Food and Agricultural Policy (BFAP).
“These calls [for an increased sugar tax] are basically designed to trick the National Treasury into defying President Cyril Ramaphosa, who recently asseverated in the State of the Nation Address that his administration was finalising an industrial policy to drive economic growth by focusing on localisation, diversification, digitisation and decarbonisation.
“Currently, the [sugarcane value chain] is on the cusp of diversification, hence our plea to government to extend the current moratorium [on increases to the sugar tax] to 2030… Our core focus right now is the ‘Reimagined Cane Industry Strategy’, wherein we are moving away from being a sugar-based industry to becoming a sugarcane-based industry [with products] such as sustainable aviation fuel, bioethanol and polylactic acid.”
‘No, the sugar tax isn’t working’
The South African Canegrowers Association (SA Canegrowers) reiterates that an independent study by the National Economic Development and Labour Council (Nedlac) found that in its first year the sugar tax had “destroyed over 16 000 jobs”.
“Health activists are also making the misleading claim that increasing the sugar tax will allow government to fund more feeding schemes for children. These two government policies are unrelated, and the tax income from the sugar tax is not ringfenced for health outcomes,” says SA Canegrowers’ chairperson Higgins Mdluli says in a statement.
“The tax has not translated in any way to the tax’s stated objective – to address obesity and diabetes in South Africa. That is because these are multifactorial diseases, as per the World Health Organization, and the causes range from food intake and a lack of exercise to underlying genetic conditions.” Godongwana’s National Budget Speech 2025 is scheduled for 2 pm on Wednesday, 12 March.
