Sugar tax a bitter pill

Staff Writer | Jun 13, 2019
Sugar cane producers’ body SA Canegrowers says a rescue plan is needed for an ‘industry on its knees’ as a result of the sugar tax imposed last year.

Demand for refined sugar in the Southern African Customs Union countries was at its lowest in 35 seasons ‘due mainly’ to the introduction of the Health Promotion levy (HPL), or sugar tax, on soft drinks by the government last year, according to SA Canegrowers.

The organisation said in a statement that industry experts ‘estimate that over 400 000 tons were displaced as a direct result of the levy over the 2018/19 season, resulting in at least 600 000 tons being exported at record low prices on an over-supplied world market’.

Newly elected SA Canegrowers chairman Rex Talmage noted that in the organisation’s 93-year history, ‘we have never faced a crisis quite like this’.

The statement said: ‘While (South Africa’s 966) commercial growers have been hard hit, the worst affected are the over 20 000 small-scale growers who rely solely on the crop for their livelihoods.’

The organisation estimates that about one million people ‘are dependent on those who benefit from the sector either directly or indirectly’.

Talmage said SA Canegrowers had begun talks with the Department of Trade & Industry last year on the sugar crisis, which impinged on the more than 10 000 people employed in the sector, and was ‘looking forward’ to the development of a rescue plan.

‘South Africa’s sugar industry is on its knees, but we are confident that (newly appointed) Minister (Ebrahim) Patel will hit the ground running,’ said Talmage.

‘Our aim is to develop a sustainable rescue plan and we are looking forward to working with the Minister to ensure there is a future for our sector based on sustainable diversification into renewable energy and other opportunities,’ he said.

An IRR report in 2016, titled ‘A Stealth Tax, Not a Health Tax’, noted that the Treasury ‘has dismissed warnings about reduced investment, growth, employment, and revenue as a result of the proposed SSB tax as “speculation” and “scare-mongering”.’

The report warned that while obesity was a problem, imposing a sugar tax would be unlikely to be effective in reducing it. It also pointed out that there were far graver health risks in South Africa which a sugar tax would do nil to address.

 

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