According to The Citizen, the proposal to hike taxes on alcohol beverages has been in motion for some time, with initial submissions on the excise tax increase originally due by December 13.
Recall the National Treasury in November, released the proposal for the policy review on the taxation of alcoholic beverages.
However, in the absence of a final decision, the Treasury has extended the deadline for comments to February 14, 2025.
This review builds on the 2014 excise tax policy review and suggests adjustments to the current framework, potentially including tax increases on alcoholic beverages.
Alcohol consumption in South Africa
A report by the National Treasury estimates that South Africa’s annual liquor consumption reached 4.5 billion litres in 2022 with gin emerging as the most popular spirit, with nearly 40 million litres consumed in 2022.
South Africa has seen a nationwide rise in cases of armed robbery, abuse, and other crimes linked to excessive alcohol consumption and abuse.
Research from WITS University conducted during the COVID lockdown, revealed that 33% of adults in South Africa consume alcohol, with 43% of these engaging in binge drinking.
The report further noted that among those who drink alcohol (33.2%), 31.4% were identified as having a potentially harmful or hazardous drinking problem, and 18.9% were classified with severe alcohol use.
Reactions from Stakeholders
Analysts have welcomed the idea saying an increase in the cost of alcoholic drinks will reduce consumption and in turn, will curb crime.
The national liquor dealers, however, have rejected the move with the argument that the decision would benefit illegal traders who were already dodging tax through their backdoor sales.
The convener of the National Liquor Traders Council (NLTC) Lucky Ntimane while speaking to The Citizen expressed dissatisfaction with the proposal.
“If anything, this proposal is a welcome relief to illicit and counterfeit alcohol producers who will continue with their operations unabated and in an environment where legal alcohol is priced outside of reach for the majority of consumers,” Ntimane said.
