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Canegrowers ask Treasury for proof that sugar tax cuts obesity

Katharine Child

SA sugarcane growers are again calling for the health promotion levy to be scrapped, this time pointing out that the Treasury missed a deadline to supply them with information on whether the tax is helping to reduce obesity.

The health promotion levy, or sugar tax, was proposed in 2016 by Wits academics who suggested that paying an added 20% of the price of a sugar-sweetened beverage would help reduce obesity.

The levy was introduced in 2018 and averages about 10% of the price of a sugary drink.

It has led to beverage producers reformulating fizzy drinks to include lower sugar levels or more sweeteners.

In December, SA Canegrowers, which represents the farmers, sent in a Promotion of Access to Information Act application to the Treasury asking it to provide all information and data relied on when introducing the levy in 2018 as well as subsequent decisions to increase it.

The Treasury had 30 days to respond to the request or explain why it needed an additional 30 days. Other than an acknowledgement of the request, the canegrowers say they have not heard back from the Treasury.

The Treasury was not immediately available for comment.

The farmers want to know if there is data showing that obesity in SA has decreased as a result of the tax.

They argue that while sugar consumption may have gone down, no data has been provided by the government to show that obesity levels have fallen in tandem.

The canegrowers feel the sugar tax is another unnecessary burden in an industry that is struggling to irrigate its crop due to intensive load-shedding, while fighting to keep up with cheap sugar imports. In addition, its largest firm, Tongaat Hulett, is facing an uncertain future.

The farmers recently reported that load-shedding was expected to cost the industry more than R700m in 2023. minister Enoch Godongwana announced a slight increase in the levy in the 2020 budget speech.

But the increase was postponed to April 2023, to allow for further engagement with affected industries.

The canegrowers say they are worried that as the implementation date for the increase draws near, the industry has yet to have any engagement with the government. And they are still in the dark on the justification for the increase.

“In the absence of any proof that the levy has been effective, and in light of the demonstrated economic destruction of the levy, SA Canegrowers calls on Godongwana to not only reverse the decision to increase the levy but to scrap the levy entirely.”

With the national budget expected to be presented on February 22, the debate over taxes is likely to intensify. The sugar tax is not ringfenced for health issues but goes into the general tax revenue streams. It is seen by some as another means for the government to increase revenue collection.

Researcher and economist Neva Makgetla, however, said the government had a right to tax sugar because of health costs caused from its excess use.

“Society bears the brunt of the overconsumption of sugar and the costs of diabetes and [sicker] people through higher health costs and higher medical insurance rates.”

Makgetla said the cane growers were being “disingenuous” when they argued there was no data to show the sugar tax reduced obesity as it would take generations to sees changes as a result of reduced sugar consumption. Those who are obese

THE SUGAR TAX IS NOT RINGFENCED FOR HEALTH ISSUES BUT GOES INTO THE GENERAL TAX REVENUE STREAMS

often stay that way, but reduced sugary drink consumption could affect children and their levels of obesity, she said.

Additionally, Makgetla said sugar farming in KwaZulu-Natal was increasingly uncompetitive and this was not due to the health promotion levy.

And most of SA’s sugar was imported from Eswatini, which receives more rain.

In a published article in 2021 in the journal Obesity Reviews, academics — including those from Wits Priceless who proposed the tax — argued that data until April 2021 revealed that purchases of sugary drinks and sugar intake dropped. The reduction in consumption after the tax was introduced was more pronounced in lower socioeconomic groups.

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2023-02-02T08:00:00.0000000Z

2023-02-02T08:00:00.0000000Z

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