South Africa has a drinking problem, which the National Treasury hopes to address through new taxes on alcoholic beverages. On Wednesday, the Treasury issued a call for written comments and proposals to assist the government in developing “an appropriate excise policy framework to reduce the harmful use of alcohol”, giving the public just a month in which to respond.
The liquor sector has objected to the 30-day notice, saying it cannot respond comprehensively to the policy document within such a short timeframe.
The period for public comments closes on 13 December.
Once that is concluded, the Treasury plans to revise the draft proposals to announce new tax hikes during the 2025 Budget in February.
The discussion document is premised on the World Health Organization’s (WHO’s) absolutist view that alcohol is harmful to health and that there is no safe level of consumption, outlined in a report published in January last year, “No level of alcohol consumption is safe for our health”, which linked even low alcohol consumption with an increased risk of premature death and disability.
The WHO reported that alcohol caused more than 3.3 million deaths (or 5.3% of all deaths) globally every year and was linked to more than 200 diseases and injuries.
WHO studies show that alcohol can affect health at lower levels than previously understood, emphasising that the safest approach is to minimise consumption or avoid alcohol altogether.
Harmful alcohol use is a major risk factor for health globally, affecting numerous health-related Sustainable Development Goals (SDGs), which is why the WHO is accelerating its global strategy to reduce alcohol-related harm as a public health policy, adopted in 2010 by its 193 member states.
South Africa, as a WHO member, is obliged and committed to adopting and executing those WHO guidelines and recommendations to address alcohol-related harm within its borders by working to prevent alcohol misuse and promote awareness.
A 2018 WHO report showed that about 59% of South African alcohol consumers over the age of 15 engaged in heavy episodic drinking.
The Treasury has highlighted the affordability of alcoholic beverages as a critical factor affecting alcohol consumption. It believes higher alcohol taxes and strategic pricing policies are effective ways to reduce affordability and address the social costs of alcohol abuse.
The WHO recommends that excise tax increases focus on reducing alcohol affordability, with South Africa’s current excise taxes at 11% for wine, 23% for beer, and 36% for spirits.
Annual duty adjustments have generally exceeded inflation, but price increases have not kept pace, resulting in higher excise duties. This discrepancy has led to concerns from the alcohol industry and advocates of reducing excessive alcohol consumption.
Over time, South Africa’s excise structure has widened the differential between duty per litre of absolute alcohol across beverage types. The duty gap between beer and spirits grew by 148%, and that between wine and spirits by 136% between 2012/13 and 2023/24. The widening disparities have raised questions about fairness in competition, with some stakeholders, especially the beer industry, advocating for uniform taxation based on alcohol content across all types of beverages.
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