The Consumer Goods Council of South Africa (CGCSA) has criticised the decision by the government to increase the sugar levy by 2.31 cents per gram saying it will result in unintended consequences of job losses and further contribute to many sustainable farmers losing their livelihoods. CGCSA was responding to the announcement by the Minister of Finance that the government has after three years of no changes, decided to increase the health promotion levy on sugar sweetened beverages.

The CGCSA said there was no consultation prior to the decision to increase the levy, neither was there sufficient consultation when the government first introduced the Health Promotion Levy (HPL) on sugary beverages, which was in support of the South African Department of Health’s Strategic Plan for Prevention and Control of Obesity, 2015-2020.

The CGCSA is concerned that the government clearly refuses to accept previous requests to allocate or ring-fence money raised from the levy to health promotion as originally planned. This is not the first time government has broken its promises. Promises were made that monies raised from the plastic bag tax would go towards environmental projects, and yet we have not seen evidence of this happening. It would appear the same has happened with commitments to use the money raised from the sugar tax to fund health promotion programmes in our national effort to fight obesity and reduce the high incidence of non-communicable diseases.

It was particularly worrying that the tax has been increased at a time when the government is implementing the Sugar Master Plan to grow the sector and protect it from imported competition. With the sugar tax expected to result in higher sugar prices, consumption will decline, and this will affect sugar farmers, who are already facing viability problems, mainly due to competition from imported sugar and rising input costs. The decline in sugar consumption will have an increased pressure on the small producers. It appears as if government has not considered nor looked at the policy implications across the various government departments, the CGCSA said.

The CGCSA last year conditionally agreed to participate in the Sugar Master Plan despite its view that the plan itself was viewed as anti-competitive. The CGCSA’s concern was and remains that the government has failed to consider the impact of its policy to introduce the sugar tax, particularly on economic recovery, job creation and investment.

We call on the government to reconsider the decision to increase the health promotion levy. Or at least, agree to our proposals that the money raised should be ring-fenced and used for its intended purpose.

Concluding, the CGCSA said manufacturers of products containing sugar, including those that are impacted by the levy, have been reducing the sugar content of their products from as early as 2016 through the Healthy Food Options Industry Initiatives (HFOII) on a voluntary basis.