The DA is pinning its hopes on its representation within the government of national unity (GNU) to lobby for a change in policy towards the health promotion levy (sugar tax), which it believes should be scrapped entirely, or at least not increased.
The levy was introduced in 2018 to reduce consumption of sugar-sweetened soft drinks in a bid to deal with SA’s obesity problem, which results in a range of non-communicable diseases such as type 2 diabetes. It is estimated 68% of women and 31% of men in SA are overweight or obese, the treatment of which costs the health system billions of rand annually.
Scrapping of the sugar tax is a hotly contested issue, strongly promoted by the sugar industry and strongly opposed by bodies such as the Healthy Living Alliance (Heala) and the Rural Health Advocacy Project. It comes up annually during public hearings on the budget in parliament.
The Treasury has always defended it because of its health benefits, though the tax does have a positive effect on the fiscus with an estimated R2.4bn in tax revenue expected for the 2024/25 fiscal year. The sugar tax equates to 2.21c per gram of sugar content that exceeds 4g per 100ml. The first 4g per 100ml is tax-free.
Heala has launched a petition calling on finance minister Enoch Godongwana to increase and expand the health promotion levy to include fruit juices in the 2024/25 budget, which he will table in parliament on February 19.
The DA has two deputy ministers with an interest in the matter — deputy finance minister Ashor Sarupen and one of the deputy ministers of trade, industry and competition Andrew Whitfield — who might attempt to influence government's approach to the tax ahead of the budget.
DA member of parliament’s trade, industry and competition committee Mlondi Mdluli said the DA now had a foot in the government. He is spearheading the DA’s campaign for the abolition of the tax on the grounds that it has resulted in significant job losses in the sugar industry and has not been proven to have reduced obesity.
Mdluli cites a 2020 study commissioned by the National Economic Development and Labour Council (Nedlac) that said in its first year of implementation the levy destroyed 16,621 jobs, 9,711 of them among commercial and small-scale cane growers. The SA Sugar Association estimated t domestic sales had dropped by 250,000 tonnes.
The Bureau for Food and Agricultural Policy in a January 2023 study commissioned by the SA Sugar Association calculated that there would be a significant decline in the sugar industry over the next 10 years if the sugar tax were to be increased.
Stellenbosch University researchers have also concluded that imposing a sugar tax alone would not change consumer behaviour or reduce obesity.
However, the job loss estimates by the industry are contested. An SA Medical Research Council/Wits Centre for Health Economics and Decision Science (Priceless SA) study said there was no evidence of job losses due to HPL, though the industry contested the methodology used.
“The tax hasn’t really shown that it has achieved what it was meant to achieve but it has caused job losses and is doing more harm than good”, Mdluli said in an interview. “There is no actual proof that the sugar tax is working to address obesity.”
He plans to launch a petition among small-scale cane growers calling for the tax to be scrapped.
A DA policy document for the 2025 budget review noted the party had consistently criticised the sugar tax. “The party believes that a review of the impact of the sugar tax and its contribution to improving the population’s diets is required. The DA is concerned that this levy has reduced the competitiveness of the local sugar industry and its ability to act as a labour absorptive industry,” the document said.
The party said the job losses extended beyond the agricultural sector and affected sugar-related industries such as packaging, distribution and processing due to decreased sugar consumption.
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