A third less sugar, and nobody can see the money
The Health Promotion Levy cut sugar bought through taxed drinks by 33% in two years and brings in about R2.6bn a year. Canegrowers wanted it scrapped in the MTBPS. The levy works; what it has never had is a visible use for the money.
33%. That is how much less sugar South Africans bought through taxed soft drinks within two years of the Health Promotion Levy taking effect in April 2018. The figure comes from a UNU-WIDER working paper by Cejka, Piek and Waseem, which uses manufacturers' and importers' SARS excise returns. Some of that demand moved to untaxed sugary drinks, which rose 15%, but the net fall was large. Few health taxes anywhere have evidence this clean.
SA Canegrowers went into the 21 October Medium-Term Budget Policy Statement (MTBPS) wanting Finance Minister Enoch Godongwana to scrap the levy (Moneyweb, 10 October). A week earlier Daily Maverick reported a new study showing that industry voices dominated the levy's Nedlac process. Both sides have a real point. The specific failure sits between them.
The growers' case The industry is in a bad year. Canegrowers say cane deliveries are down 18% on last season and recoverable value is down 17%. They link the levy to 16,000 jobs lost in cane farming and milling by 2019 (a Nedlac-commissioned figure), 250,000 tonnes of lost sugar sales in its first year, and two mill closures in KwaZulu-Natal. Cheap imports and Tongaat Hulett's business rescue are hitting at the same time; we covered the import surge in September. Chair Higgins Mdluli says that while the levy stays "on the books, growers, millers, and investors cannot plan adequately for the future." His sharpest point is about the money: the revenue goes into the National Revenue Fund and isn't ring-fenced for health. The DA has backed repeal since November 2024.
The health case The evidence doesn't stop at UNU-WIDER. A Lancet Planetary Health study (Stacey, Hofman and colleagues) found sugar from taxable drinks bought by households fell from 16.25g to 10.63g per person per day. On jobs, an interrupted time-series analysis of Stats SA labour-force data found no association between the levy and employment in sugar-related industries. That does not erase the industry's pain. It suggests the levy is not what's driving it. Health groups want the levy raised far enough to produce the WHO's recommended 20% increase in retail prices, and Parliament's finance committee has asked Treasury for an assessment including a 20% rate scenario (Budget Review 2026, Annexure A).
The fiscal bind The levy has sat at 2.21c per gram of sugar above 4g/100ml since April 2019. An increase to 2.31c announced for April 2022 was postponed, then suspended for two years in the 2023 Budget, and February 2026 left it unchanged again. So it keeps losing value in real terms. It still raises money, though. Treasury's statistical tables show R3.2bn in 2018/19, about R2.0–2.4bn a year since, and a budgeted R2.64bn for 2026/27, including the levy on imports. That's around 0.1% of tax revenue: small, but not something a Treasury defending a primary surplus will give up lightly. As Halo or noose? argues, the margin is narrow this year.
What would answer both sides The frozen rate satisfies nobody. It's too eroded for the health camp and still there to draw the industry's fire. The fix that answers the growers' best argument doesn't require ring-fencing the whole levy. It requires making part of the revenue visible. Chapter 9 of the textbook lists community health worker expansion as a Tier 1 reform: taking ward-based outreach teams to every ward, at modest cost. SA Policy Space tracks it under primary healthcare and CHW integration. A published line in the budget linking levy revenue to CHW-led diabetes and hypertension screening would turn "a tax that disappears into the fiscus" into a programme people can see. Pair it with transition support for small-scale growers under the Sugarcane Value Chain Master Plan, and the levy has a constituency.
What the MTBPS said Three questions mattered going in: whether the levy survived, whether Treasury said anything on the rate path the committee asked for, and whether any of the money was shown doing health work.
The MTBPS was silent on the levy. Godongwana's 21 October speech did not mention it: no repeal for the growers, no word on the 20% assessment the finance committee asked for, and nothing on earmarking. The only levy he touched was the fuel levy, cut temporarily from 4 November to 5 January to ease pump prices.
So the levy survives by default, frozen at 2.21c and still losing value. It has done its behavioural job. The February 2027 Budget is the next chance to show anyone where the money goes.