The National Treasury and South African Revenue Service published for public comment the Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill, which will see an increase in the sugar tax, and the SA Canegrowers is not happy about it.
The bill, which includes an increase in the Health Promotion Levy, is due to take effect on April 1, 2025.
Thomas Funke, CEO of SA Canegrowers, said the government has repeatedly undertaken to consult the sugar industry and its stakeholders regarding the effectiveness of the levy and its socio-economic impact on the sector.
“The publication of the increase in the absence of such consultation is therefore a bad faith move by the National Treasury that will have far-reaching negative implications for the already struggling industry, its stakeholders, and workers throughout the value chain.”
“The increase in the Health Promotion Levy was first announced in February 2022. Its implementation was subsequently postponed to April 1, 2023, to allow for further engagement with all relevant stakeholders. However, no consultation took place thereafter. In his Budget Speech in February 2023, Minister of Finance, Enoch Godongwana, then announced that the increase would be further delayed for a period of two years, recognising the difficult environment within which growers operate. However, since this announcement, no consultation with the industry has taken place,” said Funke.
The Parliamentary Portfolio Committee on Trade, Industry, and Competition also scheduled a colloquium on the sugar tax, with both Minister Ebrahim Patel and Minister Thoko Didiza expected to attend. However, this was subsequently postponed following the announcement of the two-year pause on the increase and has yet to be rescheduled.
Funke said the value of any future engagement in this regard with Parliament or government is called into question by the recently published bill, as the publication suggests a predetermined outcome — an increase in the sugar tax.
“As things stand, the government has produced no data demonstrating the effectiveness of the Health Promotion Levy or to justify increasing the levy further. At the same time, the uncertain future faced by South Africa’s sugarcane growers is evident, especially considering that two mills are currently in business rescue,” said Funke.
According to SARS, the Health Promotion Levy (HPL) on sugary beverages is a new levy in support of the Department of Health’s deliverables to decrease diabetes, obesity, and other related diseases in South Africa. HPL will be administered and collected by SARS.
“HPL on sugary beverages will be calculated as follows: the rate is fixed at 2.1 cents per gram of sugar content that exceeds 4 grams per ml. The first 4 grams per 100 ml are levy-free; HPL will be paid in addition to any other customs and excise duty payable, and imports will not be declared on separate bills of entry. Sugar content means both the intrinsic and added sugar and other sweetening matter, and for powder and liquid concentrates, sugar content will be calculated on the total volume of the prepared beverage,” said the tax authority.
It stated that all goods as specified in Schedule No. 1, Part 7, Section A, manufactured in or imported into South Africa will be subject to the payment of HPL, specifically: identified imported products will be taxed when they are cleared for home consumption, and locally manufactured products will be taxed at source.