OnTap Magazine

While many of us are focused on the upcoming festive season, another critical date is looming, namely the minister of finance’s budget speech in February, where increases in excise taxes are announced. With the four alcohol bans over the past 19 months devastating the alcohol industry, our sector can simply not afford another above inflation increase in excise taxes in the upcoming financial year. That is why the Beer Association of South Africa (BASA), has begun lobbying the National Treasury, the South African Revenue Service (SARS) and the Standing Committee on Finance in Parliament on this crucial issue including the negative impact of above inflation increases on the struggling industry. Critically, BASA has also called for beer industry differentiation in relation to excise treatment. We have argued that one of the main functions of excise duties is to discourage the consumption of harmful products. BASA members have already started work to promote moderate drinking and position beer as the drink of moderation and we believe that beer is ideally placed for this because of its relatively low alcohol content by volume (ABV). BASA has therefore submitted to government for consideration, that when it comes to excise duties, there should be a distinction between beer as an alcoholic beverage with a low ABV of 2.8-6% versus other alcoholic beverages with higher ABVs. We have also highlighted in our submissions that beer manufacturers have demonstrated meaningful intent to further reduce the alcohol content in their products through the introduction of no and low alcohol beers. BASA therefore believes this should be recognised and incentivised by government through the creation of a sliding scale of excise duties according to a beverage’s alcohol strength. This is already common practice in many other countries – to regulate alcohol beverages based on the beverage type and alcohol strength. For example in many Organisation for Economic Co-operation and Development (OECD) countries, including Australia, Canada, Denmark, Finland, France, Iceland, Ireland, Israel, Mexico, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom, spirits are taxed higher than beer in terms of the excise per litre of pure alcohol. Another critical issue that BASA has raised is the fact that for the past five years the year-on-year increases in excise duties have ultimately been absorbed by the consumer. As a result, citizens who find legal products too expensive purchase cheaper illicit products which are not only harmful to their health but also to the fiscus. The illicit market already accounts for 22% of all alcohol sales and has been boosted further by the four alcohol bans since the lockdown started in March last year resulting in a R11.3 billion fiscal loss. In order to ensure the long term survival of the beer industry, which supports over 450 000 livelihoods, BASA has called on government to consider either maintaining the current excise duty rate or a below inflationary increase in next year’s budget speech. We have also called for tax regulations which recognise lower alcohol products as well as incentivise the growth of SMMEs like craft brewers. BASA plans to remain a robust participant in the important debates taking place on excise taxes in the lead up to next year’s budget speech and will keep continue to keep On Tap’s readers updated in this regard. EXCISE RELIEF ENSURING THE SURVIVAL OF THE LOCAL BEER INDUSTRY IN SA IN THE LONG TERM ontapmag.co.za | Summer 2021 | 7