By Andrew Russell
National Treasury has tabled the Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill, which proposes an increase in the Health Promotion Levy (the sugar tax) to take effect from April 2025.
The proposal has sparked renewed campaigning by proponents of the sugar tax for a larger increase in the name of health. What this argument ignores is the close relationship between sustainable livelihoods and health. South Africa simply cannot afford to approach this matter as a zero-sum game; and thankfully, it doesn’t have to be.
Much hangs on the actions National Treasury and government take over the next 18 months, as the mooted increase approaches. The sugar industry is concentrated in the rural areas of KwaZulu-Natal and Mpumalanga, regions that already face significant economic challenges. Mpumalanga’s economy in particular is also facing the risks posed by the transition to renewable energy, while KwaZulu-Natal has faced waves of crises from flooding to social unrest over the past three years. Further shocks to these fragile economies should only be initiated from the most pressing of needs.
Beyond the cane heartlands, the potential collapse of the sugar industry has further implications for the broader economy and the national fiscus. Even with the uptick in employment reported by Stats SA in November this year, South Africa still has more than seven million unemployed people. There simply aren’t enough jobs to absorb the workers, who will lose their livelihoods if further pressure weakens the sugar industry. These newly-unemployed workers will require more support from the fiscus at a time when the country needs to manage its growing deficit.
These realities do not override the concern for the health of South Africans; they exist alongside the health challenges South Africans deal with. Every effort to address the complex realities of the South African landscape must therefore be able to take all these factors into consideration.
The fact is, South Africa cannot afford to view health and employment as either-or propositions. Having sufficient money to provide for oneself and one’s family is central to both wellness and dignity. And for thousands of South Africans, this essential element of life is now under threat as a result of the sugar tax. Given the stakes in this debate, it is incumbent on us all to consider if there isn’t a better way.
As things stand, the sugar industry is already focused on finding ways to build our capacity to diversify the sugarcane value chain to other products, such as biofuels. This work began under the Masterplan and continues despite the conclusion of the first phase of that social compact. Pausing the sugar tax while the industry finds its feet would buy the country time to not only build this nascent industry, but also to consider the efficacy of the sugar tax – a critical question that sugar tax advocates have failed to adequately address.
It is worth remembering that no evidence has been produced to date that the sugar tax has had any impact on obesity. Sugar tax advocates themselves have stated loudly that the intervention reduced consumption of sugar-sweetened beverages. That being the case, we should have evidence whether this reduction has led to a reduction in obesity, but no such evidence has been produced. This suggests – as the sugar industry repeatedly warned – that the measure was only a scapegoating of sugar for a bigger problem, which we have yet to examine in all its complexity.
In addition to saving the sugar industry, which already faces gargantuan challenges, pausing the sugar tax would also give us time to collaborate – industry, government, civil society and the healthcare sector – to find holistic, effective measures to improve the health of South Africans without needlessly impoverishing the growers who can least afford this measure: Black, women and young farmers, who are working hard to establish a foothold and a future in the industry.
As things stand, growers face an uncertain future, with the Tongaat Hulett and Gledhow mills in business rescue. These are critical operations in a deeply interdependent ecosystem. This milling crisis follows difficult years for the industry, with successive years of flooding, load shedding affecting irrigated growers, and social unrest that caused damage costing millions to repair.
All this is over and above the challenges broadly affecting the agricultural sector, including high input and labour costs, and deteriorating road infrastructure. Adding an increased sugar tax to this burden is simply unconscionable given the lack of evidence for the effectiveness of the intervention.
When the increase in the sugar tax was first postponed, the stated object was to allow further consultation. Had this in fact taken place, it would have created a platform to ventilate all these issues and to craft a better solution to the multiple interests and concerns involved.
While SA Canegrowers is disappointed this consultation has yet to take place, there remains an opportunity to undertake this vital work now, before we needlessly sacrifice the livelihoods of thousands of South African growers and workers.
The South African economy is in a difficult and worsening state. In this context, improving the lot of poor and vulnerable South Africans, especially in our rural communities, must be a priority not an afterthought. Sustainable livelihoods are an indispensable contributor to the wellness of our citizens and, for that reason, we must resist the call to enact well-intentioned but destructive policies such as the sugar tax. Positioning health in opposition to livelihoods is self-defeating and counter-productive, and this is a trap we must not fall into.
Andrew Russell is chairman of the South African Canegrowers’ Association.