12 months delay in the implementation of the sugar tax a relief for the cane industry

SA Canegrowers welcomed the 12-month delay on the planned increase in the Health Promotion Levy (HPL) or sugar tax.

The increase in the sugar tax from R2.21 to R2.31 cents per gram of sugar was announced in Finance Minister Enoch Godongwana’s budget speech in February and is expected to take effect on Monday, April 4, 2022.

“The delay is a welcome respite for South African growers, especially small-scale growers,” the SA Canegrowers Association said in a statement.

“In the first year of its implementation alone, the sugar tax cost South Africa more than 16,000 jobs and Rand 2.05 billion,” added SA Canegrowers.

The health promotion tax has devastated the sugar industry, and critics argue that the government has failed to produce evidence that the sugar tax has had an impact on reducing obesity levels in the country since it was introduced in 2018.

“Model commissioned by SA Cannaioli with the Bureau for Food and Agricultural Policy (BFAP) shows that keeping the sugar tax at its current level will still cost the industry another 15,984 seasonal and permanent jobs, “the organization said.

“It will be an important factor contributing to the decline of 46,600 hectares of sugar cane acreage over the next ten years,” he added.

The organization claims there would have been an increase in job and revenue losses if the planned increase had gone ahead as planned.

The increase would have exacerbated the challenges already faced by the industry due to rising input costs, including increases in fuel prices, which is currently 40% higher than the March 2021 price and is expected to rise significantly.

According to the association, fertilizer costs have also increased by more than 160% compared to last year.

“While today’s announcement offers short-term relief for growers, it is imperative that the government focus on assessing the long-term implications of keeping the tax in place,” said SA Canegrowers.

The organization plans to continue engaging the government and wants more research on the tax’s impact on obesity levels, jobs and income from 2018 to present.

“SA Canegrowers remains committed to protecting the one million livelihoods supported by the sugar industry and the success of the sugarcane value chain masterplan.”

“We believe that the only way to achieve this is to completely eliminate the sugar tax and implement a holistic approach to health that takes into account all the factors contributing to obesity in South Africa,” the organization concluded.

Compiled by Narissa Subramoney

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