Sin tax hike will negatively affect job creation – agri leaders

Stakeholders in the South African agriculture sector have voiced their disappointment about the above-inflation increases in excise duties, announced by Finance Minister Enoch Godongwana, during the national budget address on Wednesday, 23 February.

Kulani Siweya, chief economist at Agri SA, said the wine, tobacco and sugar industries had been the hardest hit by challenges resulting from the COVID-19-related restrictions, and the civil unrest in July 2021.

The increase in these taxes would impede the ability of these industries to recover from the economic hardships of the past two years, and place many marginal jobs in jeopardy, thereby diluting the positive effect of government’s employment tax incentive scheme.

Andrew Russell, chairperson of the South African Cane Growers’ Association (SA Canegrowers), said in a statement that the Health Promotion Levy on sugar-sweetened beverages, commonly referred to as the sugar tax, had cost South Africa more than 16 000 jobs and R2,05 billion in income in 2019 alone.

Recent modelling commissioned by SA Canegrowers revealed that maintaining the sugar tax at the current level would cost the industry about 16 000 additional jobs, and contribute towards a decline of 46 600ha in the area planted to sugar cane over the next 10 years.

However, various other announcements made during the address boded well for the agricultural industry, if implemented correctly.

Dawie Maree, head of information and marketing at FNB Business, said no increases in the fuel and Road Accident Fund levies were good news for farmers and motorists, as fuel prices increased more than 40% between December 2020 and December 2021.

This had driven up production and transports costs, while adding pressure on consumers’ disposable income.

Although Godongwana announced that the carbon fuel levy would increase by 1c/l to 9c/l for petrol and 10c/l for diesel, Maree said this would have a minimal impact on the overall price of fuel.

He said a revision of the fuel pricing mechanism, as mentioned, could be a good step if it reduced financial pressure on individuals and businesses, and translated into economic growth for the country.

Bennie van Zyl, TAU SA’s general manager, said the increase of R8,7 billion in the South African Police Service budget was good news, but he questioned whether “this money would go where it was needed to make a meaningful difference to farm and rural safety”.

“For us it always comes back to implementation, whether government has the capacity and skill to do what it says.”

Theo Boshoff, CEO of Agbiz, welcomed the Minister’s recommitment to get tough on non-performing state-owned enterprises, and welcomed government’s support for the Land Bank, which he said played a vital role in the economy.

Source: Farmers weekly

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