The sugar industry and consumers who like their drinks with lots of sugar have a temporary reprieve. The health promotion levy that was supposed to come into effect on 1 April has been postponed until next year.
Finance Minister Enoch Godongwana announced a sugar tax hike in his maiden budget speech in February. The tax was meant to increase to R2.31 from R2.21 a gram of sugar. This includes beverages with more than 4g of sugar per 100 ml.
The SA Canegrowers Association said on Monday that the delay of the sugar tax hike is a welcome reprieve for sugar growers, especially small-scale farmers.
“However, while the announcement provides some short-term relief to growers, it is critical that the government focuses on assessing the long-term implications of keeping the tax in place,” said Thomas Funke, the chief executive of SA Canegrowers.
The SA Canegrowers said the increase in sugar tax would have exacerbated the problems the industry already faces as a result of rising input costs, including diesel and fertiliser.
The SA Canegrowers is affiliated with AgriSA and the South African Sugar Association.
The treasury said in March that it was considering extending the sugar tax to 100% fruit juices. In the same statement about the sugar tax hike postponement, the treasury said consultations will be initiated to consider the extension of the levy to fruit juices.
The government introduced the sugar tax in 2018 with the aim of reducing obesity. The sugar tax is charged on all non-alcoholic sugary beverages, except fruit juices.
Funke said: “In the first year of its implementation, the sugar tax cost South Africa more than 16 000 jobs and R2.05-billion. This is despite the government failing to produce any evidence to date that the tax has had any impact on bringing down obesity levels in the country.”
According to the South African Sugar Association, direct employment in the sugar industry is about 85 000 jobs and indirect employment is estimated at 350 000 jobs.
Anathi Madubela is an Adamela Trust business reporter at the M&G.