A dozen healthcare organisations and more than 100 healthcare workers have signed a petition calling on finance minister Enoch Godongwana to increase the tax on sugary drinks and expand the levy to fruit juices, saying this would bring in revenue of at least R8.6bn a year.
Signatories include the SA Medical Research Council/Wits Centre for Health Economics and Decision Science (Priceless SA), the Rural Health Advocacy Project, the Progressive Health Forum and many of SA’s leading public health researchers.
Cabinet rejected the budget proposed by Godongwana last month over his plans to raise an additional R60bn in revenue by hiking VAT from 15% to 17%. He is expected to table a revised budget in parliament on March 12.
To the consternation of public health advocates, the minister’s draft budget scrapped a planned increase to the health promotion levy on April 1, saying this was to “allow the sugar industry more time to restructure in response to regional competition”.
This is not the first reprieve offered to the industry: an increase in the sugar tax announced in the 2022 budget was deferred to April 2023 and then postponed in the 2023 budget for another two years, until April 2025.
The health promotion levy was introduced by the government in 2018 to curb consumption of sugary drinks and help counter SA’s growing prevalence of obesity and related diseases. The levy stands at 2.1c for each gram of sugar above a 4g threshold per 100ml, and is limited to sugar-sweetened beverages.
The sugar industry has been staunchly opposed to the levy from the outset and maintains that reduced consumption of sugary drinks has led to job losses. SA Canegrowers previously said more than 9,700 jobs were shed on sugar farms after the levy was introduced.
Public health advocates have said there was no evidence of job losses in the sugar industry.
The petition said increasing the health promotion levy and expanding its ambit to fruit juices would decrease obesity and type 2 diabetes, and help raise much-needed revenue.
The levy is set at an effective tax rate of 8% of the retail price and should be raised to the World Health Organisation’s minimum threshold of 20%, said the petition.
“Unlike the proposed VAT increase, a health promotion levy increase would benefit the poorest the most. There is a win-win in increasing the health promotion levy. Contrary to the industry claims, empirical evidence has shown no association between the health promotion levy and employment,” it said.
A Priceless SA study that analysed Stats SA’s quarterly labour force survey found no association between job losses and the introduction of the health promotion levy.
SA Sugar Association executive director Sifiso Mhlaba said calls to increase the sugar tax were “preposterous”.
Obesity rates had continued to rise despite the implementation of the sugar tax, which had caused “a multibillion-rand revenue loss, substantial job loss in both the sugar cane growing and milling sectors, and the permanent closure of two mills in KwaZulu-Natal”, he said.
“What is urgently needed now is the saving of 1-million rural livelihoods dependent on the industry through extending the current sugar tax moratorium to 2030 to allow the sector sufficient time to pursue identified product diversification opportunities such as bioethanol for fuel blending, sustainable aviation fuel, polylactic acid and cogeneration,” he said.
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