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Sugar tax increase derails our plans to empower the industry – association

Mpho Sibanyoni Journalist
Finance ministry decision to increase the sugar tax has left sugar producers fuming.
Finance ministry decision to increase the sugar tax has left sugar producers fuming.
Image: 123RF/ ocusfocus

Finance minister Enoch Godongwana's decision to increase sugar tax has left a bitter taste in the mouth of the sugar producers.

Delivering his maiden budget speech on Thursday, Godongwana increased the sugar tax (officially known as the Health Promotion Levy (HPL), by 4.5%.

The SA Sugar Association said the tax increase went against the spirit of a plan meant to empower the industry and attract investment opportunities that will create jobs lost when the sugar tax was introduced.

"The increase goes against the objectives and principles of the all-important Sugarcane Value Chain Master Plan to 2030, which has seen the industry in recovery mode," said SA Sugar Association's chairperson Sindi Mabaso-Koyana in a media statement.

She said the master plan includes a task team which has been set up to investigate and develop an industry proposal for a long-term policy framework and approach to taxation of sugar and sugar-derived products with a view to engaging government on strategies and policies to provide certainty and predictability in support of investment and planning by industry and government.

"The work of this task team is still ongoing. President Cyril Ramaphosa has previously emphasised the critical importance of master plans for various industries with regards to assisting them with their economic recovery and sustainability."

Mabaso-Koyana said since the introduction of the sugar tax in April 2018, the industry has lost revenue of approximately R1.2bn per season.

"The sugar industry has had to close two mills due to the HPL exacerbating the already dire financial state of the sector, which faced other several serious challenges over the years,” said Mabaso-Koyana.

“Prior to the signing and implementation of the master plan, the sugar industry was already in dire straits, even in ICU, due to serious challenges such as drought, incursion of sugar imports, insufficient tariff and sugar tax. Over the past 20 years, annual sugar production has declined by nearly 25%, from 2.75-million to 2.1-million tons per annum.

"The number of sugarcane farmers has declined by 60% during this period and industry related jobs are estimated to have reduced by 45%.”

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