The South African Liquor Brand owners Association (Salba) said Finance Minister Enoch Godongwana’s announcement of increased excise taxes on alcohol by between 4.5 and 6.5 percent will hinder the recovery of the industry.
Salba chairperson Pamela Nkuna said the association made submissions to the National Treasury and the South African Revenue Service (Sars), proposing a moderate excise tax adjustment that was not higher than inflation.
“Whilst we are not completely satisfied with the outcome, we welcome the minister’s decision in that it indicates that our pleas have not gone completely unheard,” said Nkuna.
Nkuna said Salba recognises that the government's economic recovery plan places an enormous burden on the nation’s fiscus, and that as the president said in the State of the Nation Address (Sona), “a new consensus” was required, one in which the state creates an environment that enables and encourages the private sector to invest and drive the economy.
According to Salba, the industry enables an estimated 100 000 licensed independent SMME alcohol traders to earn a livelihood and provide jobs.
“The alcohol industry is a significant contributor to the fiscus through the number of people it employs who pay tax to the proceeds paid to the government from excise taxes.
“The minister’s announcement on excise, on balance increasing rates above inflation, will unfortunately not allow these businesses to contribute at their full potential.”
Salba CEO Kurt Moore said, the decision to increase excise on spirits by two percent above inflation comes as a surprise considering the already high excise incidence that spirits carry and the fact that illicit trade is most prevalent in the spirits category.
“This decision therefore creates more room for illicit traders, who pay little or no excise, to profit at the cost of the legal sector,” said Moore.
BUSINESS REPORT ONLINE