An NGO has implored finance minster Enoch Godongwana to double “sugar tax” tariffs on drinks and use the income to increase the child support grant.
Health NGO Healthy Living Alliance (Heala), in anticipation of the budget speech on Wednesday, reiterated its call on Godongwana to increase the tax, known as the health promotion levy (HPL), to 20% to ensure that the country’s most vulnerable citizens — children — realise their right to nutritious food. It said the levy should also be extended to include fruit juices, which are now exempt from the tax.
The tax, colloquially known as the “sugar tax”, is charged on nonalcoholic sugary beverages and works out to about 10% of the cost per litre of sugary drinks.
Given the country’s malnutrition problems, Heala said, the sugar tax was one way “to ensure that South Africa’s children are taken care of”.
“We believe it is the responsibility of the finance minister to raise enough funds to increase the child support grant to at least the food poverty line, which is R760 per person per month,” said programme manager Petronell Kruger.
With research showing that one in five South African households experienced food insecurity, and nearly 5-million children live below the poverty line, Kruger said social support grants, such as child support grants, “can ensure that South Africans access the most basic of needs, such as food and water”.
“We cannot live in a country where half struggle to live, while we also host the most billionaires on the continent.”
Heala noted that since the sugar tax was enacted in 2018, the National Treasury had failed to increase the levy, which not only contributes to the fiscus but also reduces the consumption of sugary drinks, reducing life-threatening noncommunicable diseases.
In his 2022 budget speech, Godongwana announced an increase in the tax on beverages with more than 4g of sugar content per 100ml, from 2.21c/g to 2.31c/g — representing an increase of 4.5%. But it was later deferred by a year to 2023. Last year Godongwana announced a moratorium on HPL hikes until 2025, after mounting pressure from the sugar industry. He said the two-year freeze was “due to the difficult operating environment for the sugar industry from the impact of flooding and social unrest”.
The South African Sugar Association (Sasa) asked the government to put a moratorium on the sugar tax, to give the industry time to diversify, since sugar cane was a flexible crop that could be used to produce other commodities. Last year the association said the industry had lost about 10,000 jobs and R4.8bn in revenue since the implementation of the HPL in April 2018.
Heala said the HPL had not increased since it was enacted in 2018.
“Growing evidence shows that health taxes are the most cost-effective tools for controlling the consumption of unhealthy foods. That is why we are calling on the Treasury to increase the HPL to 20%, with annual inflation-related increases thereafter and immediately begin the public consultation process of expansion to fruit juices and lowering the 4g threshold,” said Kruger.
It’s estimated that between April 2018 and March 2021, sugar tax generated about R7.9bn from domestically produced and imported products. Heala estimated an increase in the levy to 20% could double that revenue.
Kruger said the government “cannot keep delaying the increase to the levy and prioritising the sugar industry’s profits over our health”.
“We know that poor health costs the country money. We know that poor diets are killing people. To suspend the HPL to try to save the sugar industry when the real issues lie elsewhere is irrational and dangerous,” said Kruger.
“As it stands, the child support grant has not kept up with rising food prices, resulting in many children and families going hungry. These additional funds from the HPL will boost the fiscus, allowing the government to increase the child support grant. By raising the sugary drinks tax, the Treasury can fund this vital life-saving intervention.”
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