Categories: Articles, Resource managementPublished On: 20th February 2024

Budget 2024: Small-scale growers will bear the brunt of a sugar tax increase

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Andrew-Russell-23

Andrew Russell, Chairperson of the SA Canegrowers

As Finance Minister Enoch Godongwana presents his 2024 Budget Speech to Parliament this week, SA Canegrowers is calling on National Treasury to prioritise measures to aid economic recovery and job retention. After what has been a trying five-year period for the sugar industry, an increase in the Health Promotion Levy will be destructive and unjustifiable.

The sugar industry is suffering under the combined effects of loadshedding, high input cost inflation, natural disasters and deteriorating logistics infrastructure, much like other sectors of the economy. It also continues to face the challenge posed by the ongoing business rescue proceedings at Tongaat Hulett and Gledhow sugar mills.

Over the past six years, the SA Canegrowers have been monitoring the impact of the Health Promotion Levy (or sugar tax) closely. Independent research and modelling by the Bureau for Food and Agricultural Policy (BFAP) shows that an increase or expansion of the Health Promotion Levy would cost the sugar industry thousands of jobs and jeopardise businesses of nearly 3,000 small-scale growers. This would be over and above the thousands jobs and billions of rands in lost revenue already caused by the sugar tax since 2018.

Few sugarcane growers can keep absorbing such extra costs and still stay in business. This is over and above a skyrocketing of the costs ordinarily involved in cane growing including the input costs like fuel and fertiliser as well as increases in the national minimum wage.

The brunt of these pressures is felt by small-scale local growers who are the first to close up shop as costs spiral out of control. But the implications also extend to the one million South Africans who rely on the industry as millers, large-scale growers and other industry stakeholders struggle with the same issues.

SA Canegrowers therefore urges the National Treasury to carefully considers this economic context when making decisions regarding taxes such as the Health Promotions Levy. Too many livelihoods depend on the industry in an exceedingly difficult economic climate.

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