South Africa Wine, representing the South African wine industry, strongly condemns the Minister of Finance’s decision to implement excessive excise tax increases on wine. The government has ignored the industry’s urgent warnings and the devastating impact this will have on jobs, exports, and rural economies. Instead of fostering economic growth and industry sustainability, the government has further burdened an already struggling sector with an unworkable tax regime.
During yesterday's national budget speech, Enoch Gondwana, Minister of Finance, announced an excise increase of 6.75% on all alcoholic beverages.
We made it clear that the above-inflation excise hikes would cripple South Africa’s wine industry. The government has failed to recognise that our excise burden exceeds the 11% incidence guideline set in the 2014 policy framework and is significantly higher than competitor wine-producing nations. By pushing forward with these destructive policies, the National Treasury is directly undermining the sustainability of a sector that contributes R56 billion to GDP and sustains over 270 000 jobs.
This decision will accelerate job losses, drive producers, especially small-scale farmers, out of business, and make South African wine uncompetitive in global markets. Higher excise rates will fuel illicit trade, eroding government revenue rather than increasing it. Instead of implementing existing laws to curb alcohol-related harm effectively, the state continues to unfairly target the legal alcohol sector, which operates within strict compliance frameworks, while failing to address widespread enforcement failures that allow illegal trade to thrive.
“This is an irresponsible and short-sighted decision,” says Rico Basson, CEO of South Africa Wine. “The government has ignored economic realities and chosen a path to stifle investment, growth, and employment in one of South Africa’s most vital agricultural sectors. The wine industry is unfairly penalised while the government fails to enforce existing laws against illicit alcohol trade and harmful consumption.”
South Africa Wine will continue to challenge this unfair taxation approach. However, we welcome and look forward to engaging with the National Treasury on the proposed taxation of alcoholic beverages.