Rethinking the sugar tax in the time of global uncertainty: focus should be on jobs and the economy

AS SOUTH Africa awaits Finance Minister Enoch Godongwana' third budget framework this year, local industries are also coming to terms with the uncertainty that 2025 has brought to the international trade environment. Even though the US has suspended the proposed 30% tariff on South African goods for 90 days - instead levying 10% for the time being - the change to existing trade agreements and uncertainty is still harmful to local industries like South Africa’s sugarcane growers.

- HIGGINS MDLULI

This is a new threat to a local industry already beset by many challenges. The recent extreme, unseasonable rainfall in KwaZulu-Natal has caused isolated flooding and delayed the start of the harvesting season in some sugarcane producing areas. Cheaper sugar imports, often from countries with subsidised sugar industries, are threatening once again to eat into our proudly local produce. And the spectre of the Health Promotion Levy (or sugar tax) still hangs over the industry.

SA Canegrowers welcomed Minister Godongwana’s decision in the two previous budget drafts to not increase the sugar tax beyond its current level.

But the reality is that there is no reason for this tax to be retained at all. Since it was introduced in 2018, it has not achieved any of its stated health goals and has been destructive in many other ways. It has suppressed economic activity and cost jobs and has not generated significant revenue for the Treasury.

The South African Revenue Service (SARS) still lists the sugar tax as a policy tool aimed to decrease obesity and other non-communicable diseases. The tax aims to reduce consumption of drinks containing sugar, which in theory should have an impact on the health of South Africans. But after seven years of the tax, no evidence has been provided that it reduces disease or obesity. Yet what we do know is that it is very harmful to the rural agricultural communities that rely on sugarcane growers for jobs and stability.