The Beer Association of South Africa (BASA) today submitted its response to the National Treasury’s proposed review of the alcohol taxation system.File Picture :Ayanda Ndamane /Independent Newspapers
The Beer Association of South Africa (BASA) today submitted its response to the National Treasury’s proposed review of the alcohol taxation system.
Charlene Louw, CEO of BASA said that we appreciate National Treasury’s recognition that South Africa’s excise tax policy requires restructuring. “A well-designed system must balance the economic realities of our industry with the country’s socio-economic objectives, ensuring a sustainable and equitable approach for all stakeholders.”
Louw added that:
In its submission, BASA highlights four key principles that should guide excise tax reform:
Economic growth and stability: Any changes must support job creation and economic recovery while mitigating the expansion of the illicit alcohol trade.
Balanced taxation: Excise duties have significant economic consequences, including reduced production, employment losses, and misallocated resources. A structured and transparent system will help minimise these negative effects.
Encouraging responsible consumption: Excise duties already contribute to reducing harmful drinking by influencing affordability. Substantially increasing these duties further is unnecessary and could harm the legal market.
Market conditions: South Africa’s slow economic growth and declining real incomes impact beer affordability. Overburdening the industry with excessive excise hikes will exacerbate economic challenges.
Louw said that:
BASA’s key responses in the submission include the following:
Opposition to the current guideline tax incidence for beer: The excise tax burden on beer has exceeded the government’s 23% target for six consecutive years, contributing to rising costs and illicit alcohol trade.
Concerns over a targeted band framework: Proposals for inflation-linked increases with a 10% cap or 4% above inflation margin are excessive and could lead to diminishing fiscal returns and industry instability.
Proposal for inflation-linked adjustments: BASA supports an excise tax increase aligned with headline CPI inflation or CPI plus a one-percentage-point premium to ensure predictability and stability.
Support for a progressive excise duty structure: BASA calls for reduced excise rates for lower-alcohol beers (0.5% - 3.5% ABV) to encourage innovation and responsible drinking.
Exemption or reduction for microbrewers: Supporting craft beer producers will drive job creation, entrepreneurship, and economic diversity.
Opposition to Minimum Unit Pricing (MUP): MUP is inappropriate for South Africa, given existing affordability challenges. Instead, BASA recommends conducting a socio-economic impact assessment before any policy implementation.
Adjustment of implementation timelines: BASA advocates for excise duty rate changes to take effect on April 1 following the Budget Speech, allowing businesses time to adjust pricing strategies.
Louw added that an effective taxation policy must consider economic realities, consumer behaviour, and industry sustainability. “BASA remains committed to working with National Treasury and other stakeholders to develop a framework that balances revenue generation with industry growth and responsible alcohol consumption.”
BUSINESS REPORT