Cape Town – The Beer Association of South Africa (BASA) has warned that National Treasury’s proposed alcohol excise reforms could increase taxes on most beers by 20%, pushing up prices and driving more consumers to the illicit alcohol market.
The proposed tiered tax system would apply higher excise duties to beers with higher alcohol content, with most beers sold in South Africa falling into the affected category, Daily Investor reported.
Treasury says the changes aim to reduce harmful drinking and encourage lower-alcohol alternatives.
However, BASA argues that higher prices could boost illegal alcohol sales, which already cost the fiscus an estimated R16.5 billion in lost tax revenue in 2024, the report said.
“Under the proposed framework, beer with alcohol content between 2.5% and 9% would attract excise at 1.2 times the current rate,” the report quoted BASA CEO Nirishi Trikamjee as saying.
Solution that balances public health goals
“As most beers sold in South Africa fall within this category, the proposal would effectively increase excise on most beers by 20%.”
The association said it will continue engaging with Treasury to find a solution that balances public health goals with the sustainability of the legal beer industry.
Meanwhile, BusinessTech reports that South African Breweries (SAB) has urged National Treasury to adopt an inflation-linked alcohol excise framework instead of above-inflation tax increases.
SAB said a predictable system would protect government revenue while giving businesses the certainty to invest, create jobs and support the wider beer value chain.
The brewer also warned that excessive tax hikes could further fuel the illicit alcohol market, undermine tax compliance and hurt legitimate businesses, arguing that an inflation-linked approach would strike a better balance between revenue collection and economic growth.
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Compiled by Betha Madhomu
