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The taxation of alcoholic beverages is currently under review, and National Treasury has set the scene with its discussion paper, which was published for public comment this week.
Industry players have been given 30 days to respond to extensive proposals on a new excise tax framework for the liquor industry.
South Africa Wine, a non-profit company supporting the wine and brandy industry, says it will ask for an extension.
“It is simply not reasonable to offer only 30 days for comment,” says Christo Conradie, stakeholder engagement, market access and policy manager at South Africa Wine.
“The wine industry, as well as other players [beer and spirits] asks for an opportunity to be able to motivate their arguments or counter arguments with scientifically based evidence.”
Treasury wants to announce changes in the February 2025 budget. “That will be premature and unreasonable,” says Conradie.
Treasury explains that South Africa has, since 2004, been applying an excise tax framework which provides a guideline for the tax incidence as a percentage of the weighted average retail selling price of alcoholic beverages.
The current guideline for the tax incidence for wine, beer, and spirits stands at 11 percent, 23 percent and 36 percent, respectively. The rate of a product’s price that comprises excise duty is supposed to be staggered so that higher alcohol products are taxed more.
Higher-in-alcohol-content beverages are therefore more expensive, while lower alcohol products are taxed less and are less expensive – the idea being that people will buy ‘less harmful’ products. It is proposed that the guideline be increased for all alcohol categories (wine, beer and spirits) or to have a completely new and different framework. The first option will be to adjust the guidelines by five percentage points for wine and beer, and six percentage points for spirits.
“This option does not resolve the policy issue of excise increases moving above the guidelines framework as some of the categories would already be close to the adjusted incidence,” says Treasury. The rate adjustments over the years have been higher than inflation, which resulted in the excise incidence that is above the policy guidelines for each alcohol category.- Business Insider Africa
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