In an open letter addressed to Finance Minister Enoch Godongwana, industry representatives from the sugar value chain have called for an immediate moratorium on the Health Promotion Levy (HPL).
The call comes ahead of Godongwana on Wednesday presenting the 2024 Medium-Term Budget Policy Statement (MTBPS).
The letter, sent on Sunday, highlights the urgent need for consultations on the tax's impact, which was originally introduced to combat obesity and related health issues.
The signatories of the letter include the South African Sugar Association, the South African Sugar Millers' Association, the South African Farmers Development Association, SA Canegrowers, the Consumer Goods Council of South Africa, and the South African Sugar Converters Association.
Together, these organisations represent a diverse range of stakeholders, from sugarcane growers to food manufacturers, and they believe the levy poses significant threats to jobs and livelihoods.
The letter said, “Today we are united in calling on the Minister of Finance, Mr Enoch Godongwana to honour the commitment made publicly, in his 2023 budget announcing that consultations would be initiated with affected and interested parties as National Treasury considers adjustments to the Health Promotion Levy (HPL), including the proposed lowering of the 4g threshold and the extension of the levy to fruit juices.
“These consultations are essential for affected and interested parties to provide factual information and data on the potential unintended consequences of the HPL, which will help guide the National Treasury decision-making process.”
The sugar industry stakeholders said they believe this levy poses significant threats to jobs and livelihoods. It adds that the HPL has already led to the loss of 16,000 jobs in its first year, with potential for further increases in unemployment, particularly in rural regions where sugarcane is a vital crop.
Introduced in April 2018, the HPL aims to discourage excessive sugar consumption. However, industry advocates claim that it has not resulted in demonstrable health benefits, such as reduced rates of diabetes or obesity.
“Any increase will further decimate the land under cultivation and force thousands of small-scale growers into abject poverty. An increased tax on sugar threatens the one million livelihoods the sugar industry supports and undermines both food security and economic stability in the provinces of Mpumalanga and KwaZulu-Natal where sugarcane is grown. In short, more job losses will increase hunger and food insecurity when there is no scientific evidence that the tax has improved people’s health,” the letter said.
Economic assessments indicate that if the tax is increased or extended to include fruit juices, it could exacerbate existing economic challenges. The Bureau for Food and Agricultural Policy (BFAP) predicts that the tax could lead to a 10% decrease in sugarcane cultivation by 2030, forcing many small-scale growers into poverty.
“We are concerned that further tax hikes will threaten over one million livelihoods in the sugar industry,” the sugar stakeholders warned.
The open letter said need for cohesive government policies that align with the Sugarcane Industry Value Chain Master Plan to 2030. This initiative was established to create a sustainable framework for the sugar industry while addressing the HPL's negative effects.
“We are ready to engage with the government to ensure the long-term viability of sugarcane farming and its contribution to the economy,” said the letter.
In light of these concerns, the sugar industry coalition urged the Minister to either scrap the HPL or extend the current moratorium on increases.
“As a united industry, we call on the Minister of Finance to scrap the HPL, or at the barest minimum, extend the moratorium on any increases or broadening of the reach of the HPL until the promised inclusive consultations on the impact of the HPL are held with industry. The parties will thereafter require adequate time to consider the implications of the consultations, if any, on the sugar value chain, the economy and the health of the nation.
“We invite you to engage with the sugar and downstream industries to learn about our plans for ensuring the long-term viability of sugarcane farming through diversification, and the value chain as a whole and how a cohesive policy environment will help further unlock growth and employment, while fostering a healthier nation,” the open letter said.
BUSINESS REPORT