File Picture: Thobile Mathonsi
THE BEER Association of South Africa (Basa) has called on Finance Minister Enoch Godongwana to announce excise tax relief in his Budget speech next week.
Basa said this will ensure the future sustainability and profitability of the industry.
Basa said that with it only being seven months since the most recent alcohol lockdown ban was lifted, businesses are still struggling to get back on to their feet after being forced to stay closed for a total of 161 days over a 16-month period since the national lockdown was implemented in March 2020.
“This includes the craft breweries that managed to survive (30% of the sector permanently shut their doors as a result of the ban) and the thousands of taverns in townships across the country, who have received zero financial relief from the government. This is particularly concerning, given that each craft brewer in South Africa employs a minimum of 10 people on average. To date, the government has failed to provide the scientific evidence to justify its decision to enforce these previous four alcohol bans.”
Basa said another excise tax increase above inflation could serve as the final nail in the coffin for these and other businesses across the beer value chain who are still trying to make up the revenue lost during the bans, while being faced with other increased input costs including fuel and electricity hikes.
“It is also critical that Minister Gondongwana recognise the beer industry’s commitment to tackling alcohol-related harms and encouraging consumers to drink moderately. This has included a number of Basa’s members introducing no- and low-alcohol beers, which are available to purchase in South Africa.”
Basa said the beer industry is calling for a lower excise for beverages with lower alcohol by volume (ABV) versus other alcoholic beverages with higher ABVs.
“By introducing this excise sliding scale based on beverage type and alcohol strength, South Africa would be following a number of other countries – including Australia, Canada, Denmark, Finland, France, Iceland, Ireland, Israel, Mexico, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom – and would be encouraging people to purchase beverages that are lower in alcohol.”
Basa said that another serious consequence of the four alcohol bans has been the exponential growth of the illicit market which accounts for 22% of all alcohol sales and resulted in a R11.3 billion fiscal loss in 2020.
“With the current law enforcement system seemingly unable to stop the widespread illegal trade of alcohol, it is crucial that government employs all interventions at its disposal to tackle this problem including ensuring consumers are not forced to absorb price increases (which encourages them to buy cheaper illicit products instead) as a result of a hike in excise on legal alcoholic beverages.”