The fact that raising the sugar tax was not mentioned in today’s Medium-Term Budged Policy Statement (MTBPS) will give South Africa’s 24,000 small-scale and 1,200 large-scale sugarcane growers some measure of relief in a time when the industry is in an unprecedented crisis. Heavily subsidised foreign sugar is flooding into South Africa and displacing local sugar, putting rural livelihoods at risk.
Finance Minister Enoch Godongwana’s MTBPS did not indicate an increase to the Health Promotion Levy (HPL, commonly referred to as the sugar tax) in the 2026 Budget.
Chairman of SA Canegrowers Higgins Mdluli said: “When the sugar tax was first introduced in April 2018, 16,000 jobs were lost in the first year alone. But this year the landscape for South African sugar has changed dramatically.”
The sugar tax was first introduced before the Covid pandemic and in a year with relatively low levels of foreign sugar coming into South Africa – which up to 2025 was the norm.
“We have seen a 400% increase in imported sugar displacing locally grown sugar from retail shelves and commercial food and drink producers. The 149,000 tons and counting of imported sugar will undoubtably have a dramatic effect on the industry’s ability to remain a stable employer in rural Mpumalanga and KwaZulu-Natal. Any increase in the sugar tax would worsen an already dire situation,” said Mdluli.
The industry is concerned that the influx of imported sugar will lead to job losses and economic hardship. That the government has not amplified the pressure comes as a relief, but the industry needs more proactive steps from government.
“SA Canegrowers has always asked Treasury to scrap the sugar tax, and have asked the Department of Trade, Industry, and Competition to enact and adjust the existing tariff policy framework speedily to keep up with global realities,” said Andrew Russell, vice-chair of SA Canegrowers. “This call is now even more urgent. The added cost of the sugar tax on beverage producers has made imported sugar more appealing to them, thereby punishing local growers even further.”
Mdluli added: “Since the sugar tax has been in place, no data or studies have been provided that show it has had any impact on reducing obesity levels, lowering rates of diabetes or leading to a healthier population.”
The sugar industry supports a million livelihoods and is a large employer in rural provinces of Mpumalanga and KwaZulu-Natal. These areas have few opportunities for employment, and sugarcane growers are key anchors of economic stability in these areas.
ENDS
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