Finance minister Enoch Godongwana's now-postponed budget proposed that an increase in the sugar tax in April be cancelled to allow the sugar industry to adjust to the regional sugar market and align with the sugar master plan Vision 2030.
Godongwana was meant to table the 2025 budget in parliament on Wednesday afternoon, but cabinet would not approve the budget due to a proposal to raise the VAT rate from 15% to 17%. The first budget speech under the government of national unity will now take place on March 12.
The sugar industry has called for a five-year moratorium on the health promotion levy (HPL) or sugar tax.
The sugar lobby, led by the South African Sugar Association (Sasa), has decried the HPL, which it said cost the industry R1.2bn and threatened 300,000 jobs. It was probably here to stay as it provided the government with R10bn in revenue in 2023.
The Budget Review, which journalists and editors have seen, stated: “An inflationary increase in the health promotion levy was due to take effect from April 1 2025. Government proposes to cancel this increase to allow the sugar industry more time to restructure in response to regional competition.”
Godongwana's postponed budget cancels sugar tax hikes after industry pleas
Image: Esa Alexander/Reuters
Finance minister Enoch Godongwana's now-postponed budget proposed that an increase in the sugar tax in April be cancelled to allow the sugar industry to adjust to the regional sugar market and align with the sugar master plan Vision 2030.
Godongwana was meant to table the 2025 budget in parliament on Wednesday afternoon, but cabinet would not approve the budget due to a proposal to raise the VAT rate from 15% to 17%. The first budget speech under the government of national unity will now take place on March 12.
The sugar industry has called for a five-year moratorium on the health promotion levy (HPL) or sugar tax.
The sugar lobby, led by the South African Sugar Association (Sasa), has decried the HPL, which it said cost the industry R1.2bn and threatened 300,000 jobs. It was probably here to stay as it provided the government with R10bn in revenue in 2023.
The Budget Review, which journalists and editors have seen, stated: “An inflationary increase in the health promotion levy was due to take effect from April 1 2025. Government proposes to cancel this increase to allow the sugar industry more time to restructure in response to regional competition.”
BUDGET 2025 | Godongwana’s outlook sees GDP hovering at 1.9% and below until 2027
The review said it sought to mitigate the impact of its proposal for a two percentage-point VAT hike. The review also noted gross value in the agriculture sector fell by 15.5% over the first two quarters of 2024 compared with the first two quarters of 2023.
“Production of summer crops such as maize, soybeans and sunflowers was affected by El Nino-linked heatwaves, while the livestock sector recovered after the avian influenza outbreak in 2023. A rebound is anticipated in 2025 as a weak Le Nina brings higher rainfall and lower temperatures and the livestock sector continues to recover.”
Godongwana also gave the industry some reprieve from an HPL hike in his 2023 budget, announcing the tax of 2.1 cents a gram of the sugar content exceeding 4g per 100ml would not increase for two fiscal years.
The industry employs 65,000 people permanently and another 217,000 indirectly, according to Sasa.
Business Times
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