Sugar industry taxes cut, report shows

A report, commissioned by the National Council for Economic Development and Labor (Nedlac) at the request of the Trade and Industry Portfolio Committee, showed that in 2019, the sugar tax resulted in the loss of 9,154 jobs in the sugar sector, or nearly 10%. of its workforce.

In addition, the tax reduced the industry’s gross value-added contribution to the economy by R 1.19 billion, according to the industry body South African Canegrowers Association (SA Canegrowers).

The report “Economic Impact of the Health Promotion Tax on the Sugar Market Industry” shows that a total of 16,621 jobs have been lost due to the health promotion tax, or sugar tax. , which entered into force on April 1, 2018.

In addition, the tax also resulted in a R653 million drop in investment in industry and the related economy.

As a result of these losses, the total contribution of the sugar industry to South Africa’s gross domestic product declined by a cumulative amount of R 2.05 billion in 2019.

Before the implementation of the sugar tax, sugar cane producers supported 94,621 direct, indirect and induced jobs in 2017, which represented 11.2% of all South African agricultural workers.

In addition, while the cultivation of sugarcane contributed R10.5 billion to the national gross domestic product in 2017, this figure declined by approximately R14.7 million per year after the introduction of the sugar tax, and a cumulative total of Rand 414.2 million after the second year.

“However, it is important to stress that these findings only cover the first year of the implementation of the sugar tax and, therefore, these figures are undoubtedly much higher due to the fact that the tax is still in effect. three years later, “he added. says the association.

“The sugar tax was also implemented at a time when the sugar industry had already been hit by other significant headwinds, including droughts, rising production costs and cheap sugar imports. It is clear from the report that the tax was the last nail in the coffin for many rural sugarcane producers’ businesses and agricultural jobs.

There is no evidence that the tax has achieved its stated goal of reducing national obesity levels. This means that the sugar industry has borne the brunt of an unsubstantiated health intervention, he adds.

Nedlac referred the report to the Portfolio Committee on Trade and Industry and SA Canegrowers said he was eager to discuss with committee members the findings.

The association welcomed that the report’s release coincided with the recent establishment of the Sugar Cane Value Chain Master Plan Task Force on Commodity Tax Policy, which has been tasked with ” examine the impact of the sugar tax on rural communities and economies in sugarcane growing areas, as well as the financial viability of the industry.

“We hope the report will finally enable the government to respond to the sugar industry’s calls to end the sugar tax. This is essential for the success of the sugarcane value chain master plan and ultimately the recovery of the sector.

“SA Canegrowers will continue to engage with government and other industry stakeholders on key challenges facing the sector, including the sugar tax. We hope that by working together we can liberate the country of this tax, which has already cost our industry, its workers and the national economy too ”, says the association.

Rachel J. Bradford