Small-scale sugarcane farmers can breathe a sigh of relief following Finance Minister Enoch Godongwana announcing a 12-month delay in the implementation of the Health Promotion Levy (HPL), also known as the sugar tax. The increase in the tax from R2.21 to R2.31 per gram of sugar was expected to come into effect this week.
The delay comes after criticism from various groups, including the SA Farmers Development Association, which described the hike as a slap in the face for small-scale sugarcane growers and warned it would ruin an already crippled sector. The government was also attacked for not adhering to the Sugarcane Value Chain Masterplan in which it undertook to put a moratorium on product tax policy changes
While the Treasury has delayed the hike, it has pointed out that the finance minister is not legally bound to adhere to the master plan. The decision has been welcomed by the SA Canegrowers, which warned that if the tax hike had been implemented, many more jobs would have been lost. “Modelling commissioned by SA Canegrowers with the Bureau for Food and Agricultural Policy (BFAP) shows that maintaining the sugar tax at the current level will still cost the industry a further 15,984 seasonal and permanent jobs, and will be a major contributing factor towards a decline of 46,600 hectares of area under cane over the next 10 years,” SA Canegrowers said.
Building generational wealth through family businesses
Celebrating Five Years of Empowering SMMEs
An exclusive event for entrepreneurs
by Vutivi Business News
“The delay is a welcome reprieve for South Africa’s growers, especially small-scale growers. “In the first year of its implementation alone, the sugar tax cost South Africa more than 16,000 jobs and R2.05 billion.” SA Canegrowers also said that it was critical that the government focused on the long-term detrimental effects on the sector if the tax remained.
It insists that South Africa instead approach obesity in a holistic manner. But the Treasury is standing its ground, saying the tax will not be scrapped. In a written response to Vutivi News, it noted that like most taxes, the introduction or increase in the tax rate would be welcomed by some and criticised by others. “In the case of the HPL, it has been welcomed by the health sector, including organisations like HEALA, (Healthy Living Alliance) who also criticise the government for not increasing the rate significantly,” Treasury said.
“The HPL was only adjusted for inflation for 2022/23, which means that there is no increase in real terms.” And on the master plan, it said: “The Constitution… vests the power of introducing tax legislation… solely with the minister of finance, and such power is not (and was not and cannot be) legally constrained by any other legislation or agreement with any entity or stakeholders.”
