The National Treasury has issued a 30-day notice for public comments on proposed alcohol taxes, aiming to address South Africa’s significant alcohol-related issues.
However, the liquor industry has criticised the short timeline, arguing that it limits their ability to provide comprehensive feedback.
The public consultation period closes on December 13, after which the Treasury plans to finalise its proposals and announce potential tax hikes in the 2025 Budget in February.
The Treasury’s draft proposals are informed by the World Health Organisation’s (WHO) stance that there is no safe level of alcohol consumption.
Globally, alcohol is associated with more than 200 diseases and injuries and is responsible for over 3.3 million deaths annually, or 5.3% of all fatalities.
Harmful alcohol use is a major public health concern, impacting health-related Sustainable Development Goals (SDGs).
As a WHO member, South Africa is committed to implementing WHO recommendations to curb alcohol-related harm, including efforts to prevent misuse and raise public awareness.
A 2018 WHO report revealed that approximately 59% of South Africans over the age of 15 engaged in heavy episodic drinking.
The Treasury has emphasised that the affordability of alcohol significantly influences consumption rates.
It argues that increasing excise taxes and implementing strategic pricing policies can effectively reduce alcohol’s affordability and mitigate its social costs.
Currently, excise taxes in South Africa stand at 11% for wine, 23% for beer, and 36% for spirits.
Although annual duty adjustments often exceed inflation, price increases have not kept pace, leading to rising excise duties.
This has sparked concerns from both the alcohol industry and advocates of reducing excessive alcohol consumption.
Over the years, disparities in excise duties across different alcoholic beverages have widened. For instance, between 2012/13 and 2023/24, the duty gap between beer and spirits increased by 148%, while the gap between wine and spirits grew by 136%.
These discrepancies have raised concerns about unfair competition, with some stakeholders, particularly in the beer industry, advocating for uniform taxation based on alcohol content.
The Treasury also acknowledges the challenges posed by the illicit alcohol trade, which undermines both revenue collection and public health efforts.
Studies estimate that illicit products—counterfeit, smuggled, or unregulated—account for 14–22% of South Africa’s alcohol market, although industry insiders suggest the figure could be as high as 50%.
In addition to excise taxes, the WHO recommends implementing minimum unit pricing (MUP), which sets a price floor for alcohol to prevent retailers from absorbing tax increases.
MUP aims to reduce the availability of cheap alcohol and its associated harms. The Treasury is considering introducing MUP in South Africa as part of a broader policy framework to address alcohol abuse.
While the Treasury’s proposals aim to curb the harmful effects of alcohol consumption, industry stakeholders warn that rushed policy implementation could have unintended consequences.
As the debate unfolds, the balance between public health priorities and economic impacts remains at the forefront.
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