The South African tax that leaves a bitter taste in the mouth of one farming sector

SA Canegrowers has called on Finance Minister Enoch Godongwana to scrap the sugar tax, which it says is a job-killing policy hurting the agricultural community.

SA Canegrowers represents 27,000 small-scale and 1,250 large-scale sugarcane growers in KwaZulu-Natal and Mpumalanga.

South Africa’s sugar tax, officially termed the Health Promotion Levy (HPL) on sugar-sweetened beverages, was introduced on 1 April 2018.

It forms part of the Department of Health’s broader strategy to combat rising rates of non-communicable diseases (NCDs) like type 2 diabetes, obesity, and hypertension.

Public health advocacy groups, such as the Healthy Living Alliance (HEALA) and researchers from Wits University, push for a higher rate.

These groups argue that a steeper tax is needed to meet South Africa’s non-communicable diseases reduction goals.

On the other side are the SA Canegrowers, who said that the tax should be known as the job-killing Health Promotion Levy.

“The sugar tax has compounded the pressure on growers who have had to endure two years of subsidised imports from Brazil, Thailand, India and Eswatini,” it said.

These subsidised imports have displaced locally produced sugar and contributed to this year’s near-collapse of Tongaat Hulett.

“Treasury has in the past recognised the negative impact the sugar tax has placed on the industry,” it said.

“In the 2025 Budget, it cancelled a planned inflation-linked increase to allow the sugar industry more time to restructure in response to regional competition.”

SA Canegrowers said that the reality on the ground is that the pressure on the industry has grown.

“For two years, weak tariff enforcement and an outdated tariff reference price meant that sugar from countries like Brazil, Thailand and India flooded South Africa,” it said.

“Although the tariff reference price was finally adjusted in August 2026, foreign sugar displaced locally grown sugar.”

Similarly, sugar produced in Eswatini increasingly finds its way onto South African shelves, sometimes confusingly labelled to obscure the country of origin.

“Eswatini and South Africa are in a free-trade zone, and the new tariff regime does not put Eswatini sugar on an equal footing with locally produced sugar,” it said.

“Government has shown that it understands what is at stake for South African growers and for the rural economies,” SA Canegrowers chairman Higgins Mdluli said.

“Increasing tariffs on sugar entering our ports and ensuring Tongaat Hulett did not liquidate were welcome steps in the right direction.”

However, he added that the sugar tax continues to work against them, despite the government’s efforts to ensure a sustainable sugar industry.

He said that when the sugar tax was introduced in South Africa in 2018, its impact on the industry was immediate.

A NEDLAC-commissioned study showed it cost the industry 16,000 jobs in its first year and contributed to the closure of two sugar mills in KwaZulu-Natal.

Modelling by the Bureau for Food and Agricultural Policy has shown that, if the levy remains in place, the area under sugarcane will continue to shrink.

“Eight years on, there is no evidence that the levy has had any impact on health outcomes,” Mdluli said.

“Removing the levy is one of the few measures available to government that would ensure local sugar sales can recover after two devastating years.”