The South African Canegrowers’ Association has asked Finance Minister Enoch Godongwana to abolish the Health Promotion Levy, commonly known as the sugar tax, in the Medium Term Budget Policy Statement (MTBPS) on 21 October.
The association says the levy is undermining the sugar value chain because beverage manufacturers are buying less locally produced sugar. Its call comes during a difficult season. Cane deliveries to mills are down 18% on the previous season, and the recoverable value extracted from that cane has fallen 17%.
Chairperson Higgins Mdluli urged President Cyril Ramaphosa’s government to remove the levy entirely. He said this would allow the industry to focus on diversification projects, including green industrialisation, which depend on long-term capital and policy certainty.
| Indicator | Figure |
|---|---|
| Levy introduced | April 2018 |
| Levy rate | 2.21c per gram above 4g/100ml |
| Cane delivered, current season | Down 18% |
| Recoverable value, current season | Down 17% |
| Farming and milling jobs lost by 2019 | 16,000 |
| Sugar sales lost in first year | 250,000 tonnes |
| Levy revenue, 2018/19 | R3.2bn |
| Average annual revenue since | About R2.3bn |
The levy was introduced in April 2018. It is charged on sugary drinks at 2.21c for every gram of sugar above the first 4g per 100ml. According to SA Canegrowers, it has cost the industry billions of rand in revenue and many jobs, and contributed to the permanent closure of two mills in KwaZulu-Natal. The industry lost 250,000 tonnes of sugar sales in the levy’s first year. A study commissioned by the National Economic Development and Labour Council (Nedlac) found that 16,000 jobs in sugarcane farming and milling had been lost by 2019.
The association also argues that the levy conflicts with the Sugarcane Value Chain Master Plan, which growers, millers, retailers and government signed to stabilise the industry and diversify its products. It says continued uncertainty over the levy makes it difficult for growers, millers and investors to plan.
The levy is not the industry’s only pressure. The association points to more than two years of cheap sugar imports, weak enforcement of import tariffs, and the extended business rescue of Tongaat Hulett, one of the country’s largest millers. The milling season may run longer than usual, but growers face losses if crushing volumes do not recover.
SA Canegrowers also questions how the levy’s proceeds are used. The revenue goes into the National Revenue Fund rather than being set aside for health programmes. The association says this weakens the public health case for a tax that burdens an agricultural sector.
The levy raised R3.2bn in its first year. Annual collections have since averaged about R2.3bn, according to health publication Spotlight. The rate has not been raised for several years. A planned increase to 2.31c per gram, announced for April 2022, was postponed after Treasury said it needed to consult further.
Public health researchers have taken the opposite position. A 2021 study in The Lancet Planetary Health found that average consumption of sugar-sweetened beverages fell from 519ml to about 443ml per person a day after the levy was introduced. Researchers at Wits University and health groups such as Heala have called for the levy to be raised to 20% of the price of a drink, citing the country’s diabetes and obesity rates. A study published in BMC Nutrition examined the levy’s link to employment and challenged the claim that it caused widespread job losses.
Treasury has not said whether the levy will be addressed in the MTBPS. Godongwana’s 2025 budget left it unchanged.