Warning over South Africa’s ‘job-killing’ tax

SA Canegrowers has warned that the sugar tax is killing jobs in South Africa and has called on Finance Minister Enoch Godongwana to scrap the levy.

SA Canegrowers noted that the Health Promotion Levy (the sugar tax) has been a significant blow to rural economies in South Africa.

The association argues that since its introduction in 2018, the levy has led to widespread job losses, economic strain, and uncertainty for those reliant on the sugar industry.

SA Canegrowers, representing 24,000 small-scale and 1,200 large-scale sugarcane growers, is urging Godongwana to scrap the tax altogether.

Higgins Mdluli, Chairman of SA Canegrowers, has been vocal in highlighting the detrimental effects of this policy.

In a direct appeal to Minister Godongwana, Mdluli has outlined the devastating impact of the sugar tax, which was initially introduced to curb sugar consumption and promote health.

“There is little to no conclusive evidence that it has had any meaningful effect on reducing obesity or diabetes,” said Mdluli.

“Instead, what is clear is the economic damage it has caused.

“A study conducted by Nedlac revealed that in the first year alone, the tax resulted in over 16,000 job losses and wiped out R2 billion in income.

“For rural areas in KwaZulu-Natal and Mpumalanga, where the sugar industry is often the backbone of local economies, these losses have been particularly crippling,” he added.

Recognising the industry’s struggles, Minister Godongwana previously placed a moratorium on increasing the sugar tax, acknowledging the inflationary pressures and broader environmental challenges the sector faces.

However, there is now growing pressure from activists to raise the levy once again.

Mdluli highlighted that, alarmingly, the tax was initially implemented based on a single academic modelling study with no real-world evidence to back it.

The government had also committed to conducting an economic impact study on the levy, but this has yet to materialise.

Mdluli has reiterated that the lack of a proper review process makes it clear that the tax is being driven by ideology rather than economic or scientific realities.

“The sugar industry is not seeking special treatment or financial bailouts; instead, it is asking for fair and sustainable policies that support economic growth,” he said.

Since 2020, industry stakeholders—including farmers, millers, retailers, and food producers—have been actively working with the Department of Trade, Industry and Competition to drive transformation and create new markets for sugarcane products.

This effort is reflected in the Sugar Value Chain Master Plan 2030, which aims to stabilise the industry and unlock future opportunities.

Mdluli has stressed that these initiatives are key to ensuring long-term sustainability and that the government should be fostering, not hindering, their growth.

One of the most promising developments within the sugar industry is the potential expansion into Sustainable Aviation Fuels (SAFs) and biofuels.

These emerging markets could provide a crucial lifeline, creating new job opportunities and securing long-term economic sustainability.

However, for these initiatives to succeed, they require a stable supply of sugarcane—something that is increasingly under threat due to the financial pressures imposed by the sugar tax.

Without a thriving sugar industry, the feasibility of biofuel projects diminishes, and the potential for economic diversification is lost.

Mdluli has warned that without immediate intervention, these promising opportunities may never come to fruition.

SA Canegrowers has extended an invitation to Minister Godongwana to visit KwaZulu-Natal and Mpumalanga to see firsthand the real-world consequences of the sugar tax.

They are urging the Minister to engage directly with those affected and to reconsider the long-term viability of a policy that has already done so much harm.

The decision on whether to maintain or scrap the sugar tax is not just about fiscal policy—it is about the future of thousands of workers, the economic health of rural communities, and the sustainability of an industry that has the potential to innovate and grow if given the right support.

Mdluli has made it clear that scrapping the tax is essential for the industry’s survival.