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The South African alcohol industry is wary of excise duties ahead of 2022 Budget Speech

In a statement, the Beer Association of South Africa (BASA) said the Minister needs to ensure the future sustainability and profitability of the industry by providing relief to protect businesses across the beer value chain. Picture: Jacques Naude/African News Agency(ANA)

In a statement, the Beer Association of South Africa (BASA) said the Minister needs to ensure the future sustainability and profitability of the industry by providing relief to protect businesses across the beer value chain. Picture: Jacques Naude/African News Agency(ANA)

Published Feb 19, 2022

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The South African alcohol industry has called on the Minister of Finance, Enoch Godongwana, to put forth measures to improve conditions in the sector during the 2022 Budget Speech on February 23.

In a statement, the Beer Association of South Africa (BASA) said the Minister needs to ensure the future sustainability and profitability of the industry by providing relief to protect businesses across the beer value chain.

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According to BASA, many alcohol retailers are still struggling to recover even after seven months of the alcohol ban being lifted.

“This is due to 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 have managed to survive (30 percent 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,” said the association.

Vinpro appealed to the Treasury to stop ‘excessive tax hikes’ in the wine sector when announcing excise duties (charges imposed on high-volume daily consumable products) in the upcoming speech.

MD of Vinpro, Rico Basson, said while the industry is slowly recovering from the impact that the domestic and travel bans have had on revenues, producers are also confronted with an exponential increase in input costs.

“We believe that a specific dispensation is justified for the wine sector because it has been disproportionately affected by the lockdowns. The industry already complies with the excise incidence rate.”

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Basson said the organisation had made a formal submission where Vinpro emphasised the dire need for dispensation in the wine sector, including a marginal adjustment in excise duties.

“We have seen that an increase in excise duties (8 percent increase in 2021) fuels illicit trade (22 percent of the domestic liquor market) instead of acting as a deterrent for those who do not consume wine in a responsible way,” said Basson.

The chief executive of South African Liquor Brand Association (SALBA), Kurt Moore, said whilst excise rates have quadrupled since 2000, World Bank data shows that, over the same period, total alcohol per capita consumption in the country has remained unchanged.

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Moore said SALBA proposes a moderate adjustment in the 2022 Budget Speech that is not higher than inflation to allow the alcohol industry to play a role in the nation’s economic recovery.

“Increasing excise rates above inflation will continue to provide a competitive advantage to illicit traders at the cost of the legal market and society at large,” said Moore.

SALBA said at present, the industry enables an estimated 100 000 licensed independent SMME alcohol traders to continue trading and earning a livelihood.

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“Excessive taxation is just another form of red tape hindering economic growth,” said Moore.

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