HEALTH activists and SA Canegrowers find themselves at loggerheads in the runup to the 2025 budget announcement with one side saying that the sugar tax should be increased and the other warning of its dire effects.

Health activists are calling for an increase in sugar tax but SA Canegrowers say it will lead to thousands of job losses. File pic.

Finance Minister Enoch Godongwana is scheduled to present the annual budget to the nation on February 19.

The Healthy Living Alliance’s (HEALA) has called on the minister to increase the Health Promotion Levy (HPL) or “sugar tax”, saying that it was a critical tool for tackling the country’s dual burden of malnutrition, which occurred alongside stunting in children.

In response the SA Canegrowers has warned that by raising these taxes it could lead to thousands of job losses and has called on the government to scrap it. .

The alliance’s Angelika Grimbeek told the Independent on Saturday that unlike sin taxes (cigarettes and alcohol) which are increased every year, the government has not increased the HPL for several years.

“The World Health Organization suggests that there should be a levy imposed on sugar-sweetened beverages of at least a rate of 20% for there to be significant impact on health and also on consumer behaviour. With nything that disrupts the food and beverage industry, there's going to be a lot of lobbying against these types of policies. The Treasury listened to both sides and they decided to implement the HPL, but at a much lower rate than what is suggested for these positive health outcomes. So the rate at that stage was around 11%,” she said.

According to Grimbeek there hasn't been an increase for so long that the HPL has dipped below 10%, yet there have been positive results. “There has been lots of evidence showing that there has been a change in consumer behaviour when it comes to buying and consuming these sugar sweetened beverages. So people are actually drinking less of these sugar sweetened beverages since the implementation of the levy.”

Grimbeek said the the levy should be at least 20% to see changes in the behaviour of consumers which will happen when people buy less sugary drinks and there is a positive change in their health. She also called for the levy to be broadened to include ultra-processed products like sugary fruit juices, which were often “wrongly” seen as healthy, and said that by raising the levy there would be more funds for essential programmes like the National School Nutrition Programme.

“The health and well-being of our children is at stake. With the right policies, we can build a healthier, more equitable society,” said Grimbeek.

However, Higgins Mdluli the chairman of SA Canegrowers argued that when the sugar tax came into effect in 2018, it had a massive impact on rural livelihoods.

“The tax led to in excess of 16 000 job losses and R2 billion in lost revenue in the first year alone. Any extension or increase of the tax will unleash similar economic devastation upon South Africa’s sugar industry, leading to misery for the thousands who will lose their jobs as a result.”

Instead, Mdluli urged Godongwana to scrap the “destructive tax” saying that there wasn't any evidence to prove that it had resulted in health benefits or a drop in the rate of obesity and diabetes in South Africa. “That is because these are multifactorial diseases, as per the World Health Organization, and the causes range from food intake and a lack of exercise to underlying genetic conditions.”

Mdluli said the income collected from the sugar tax also came at the cost to jobs and the income levels in the sugar industry, which had a negative impact on the personal and corporate income tax paid in South Africa.”

“SA Canegrowers represents 24 000 small-scale and 1 200 large-scale growers in KwaZulu-Natal and Mpumalanga. These growers are vital employers and economic drivers in their rural communities that offer fewer alternative employment options.

“Pushing more rural South Africans into poverty by increasing a destructive tax will not benefit,” said Mdluli.