SOUTH AFRICA – South Africa’s sugar industry is urging the government to impose a six-year moratorium on increases to the Health Promotion Levy (HPL), commonly known as the sugar tax, to prevent the potential collapse of the industry and avert the loss of nearly 300,000 jobs.
The South African Sugar Association (SASA) has requested the National Treasury to extend the freeze on the levy until 2030 to give the sector time to recover and implement further reforms under the Sugar Master Plan.
South Africa introduced the HPL in 2018, becoming the first country in Africa to impose a tax on sweetened beverages with a sugar content exceeding 4g per 100ml.
The tax was implemented in response to a growing public health crisis caused by rising levels of obesity and diabetes. Currently, the tax is set at 2.1 cents per gram of sugar above the threshold.
In February 2023, Finance Minister Enoch Godongwana granted a temporary reprieve, announcing no increases to the tax for the following two fiscal years.
However, this grace period is set to expire in February 2025, raising concerns within the sugar industry.
SASA CEO, Trix Trikam, highlighted the severe impact the levy has already had on the sector, especially as the beverage industry is the sugar industry’s largest customer.
Trikam warned that any further increases in the HPL would deal a crippling blow to sugarcane farmers, as the cost of production would far outweigh the prices they receive for their crops, potentially forcing them to abandon sugarcane farming altogether.
“The farmers are going to be in trouble. They will not be able to survive because the cost of production of sugarcane will be much higher than what they receive,” Trikam stated.
SASA has emphasized the importance of advancing to phase two of the Sugar Master Plan 2030, which focuses on ensuring the long-term viability of the sector.
Phase one, which concluded in March 2023, helped stabilize the industry and restore local market sales that had been lost due to the HPL.
The industry now seeks to diversify beyond sugar production into products such as bioethanol and co-generated electricity.
Sifiso Mhlaba, SASA’s National Market and Trade Policy Director said, “We are wanting to move from a sugar industry to a sugarcane-based industry, producing sugar as well as other products.”
He added that the industry also aims to contribute to the country’s economic and social development while creating prosperity for all players in the value chain.
SASA has called on the government for continued support to help the industry realize its diversification goals and ensure its long-term sustainability.
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