SA Canegrowers

Treasury misses deadline to give reasoning for job-killing sugar tax increase

Press Statement by Andrew Russell Chairman SA Canegrowers

February 1, 2023

National Treasury has missed the 30-day legislative deadline to respond to a Promotion of Access to Information Act (PAIA) application submitted by SA Canegrowers to provide all information and data relied upon when introducing the Health Promotion Levy as well as subsequent decisions to increase it. 

While national government has indicated previously that the HPL was introduced in order to bring down obesity levels in the country, it has failed to date to produce any data to support this argument or to show that the tax has had any impact in this regard. What is clear though is the devastating economic impact the HPL has had on the sugar industry over the past few years with thousands of jobs being lost and billions of Rands in lost revenue. 

Headwinds

In recent months, milling giant Tongaat Hulett has had its South African operations placed under business rescue while SA Canegrowers data has shown that loadshedding is expected to cost the industry more than R700 million this year alone. With these headwinds facing the industry, and thousands of jobs on the line, maintaining the Health Promotion Levy is both unjustifiable and unconscionable.

The PAIA request, submitted on 14 December 2022, specifically sought any health-related information relied upon in decision-making about the Health Promotion Levy; any data and research relied upon demonstrating that the Health Promotion Levy has in fact reduced obesity levels (not sugar consumption) in South Africa since its implementation in April 2018; submissions, memoranda, summaries, and other documents considered by Minister Godongwana in deciding to increase the Health Promotion Levy; and submissions, memorandums, summaries, and other documents considered by cabinet on the issue of the Health Promotion Levy.

Thousands of jobs at risk

Evidence of the destructive impact of the Health Promotion Levy has been submitted to Treasury since 2021 when a NEDLAC-commissioned study showed that the levy had cost the industry R2 billion and more than 16,000 jobs in its first year alone. Further modelling completed by the Bureau for Food and Agricultural Policy demonstrated that merely maintaining the levy would kill a further 15,000 jobs and reduce the area under cane by 46,600 hectares over the next ten years.

Despite this information being shared with Treasury, in his Budget Speech in February 2022, Minister Enoch Godongwana announced an increase in the levy. The implementation of the increase was subsequently postponed to 1 April 2023, ostensibly to allow for further engagement with all relevant stakeholders.

As the implementation date for the increase draws near, the industry has yet to have any engagement with government on the planned increased. As a result, industry stakeholders have had no opportunity to enquire into the reasoning or the justification for the increase. This is especially important since government has to date provided no data demonstrating the effectiveness of the levy in achieving its stated objective, that is, to reduce obesity and the prevalence of obesity-related diseases in South Africa.

A matter of survival

In the absence of any proof that the levy has been effective, and in light of the demonstrated economic destruction of the levy, SA Canegrowers calls on Minister Godongwana to not only reverse the decision to increase the levy, but to scrap the levy entirely. This is a matter of survival for sugarcane growers, for industry value chain stakeholders, and for the one million South Africans who rely on the industry for their livelihoods.

Media Enquiries:

Kabelo Kgobisa

081 874 2573

 

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