South Africa Breweries calls for tax reduction to save industry

SOUTH AFRICA – South African Breweries is calling on the government to reduce the excise tax rate in its national budget or face further disinvestment and job losses.

In a media briefing, the group warned that South Africa was not currently an investment-enabling environment and that it could look at importing certain products which could be harmful to the local economy.

It said that smaller players in the alcohol industry will also benefit from a reduced excise tax after months of lockdown restrictions decimated businesses – with more than 30% of local craft breweries forced to close and over 150,000 jobs lost, reports Business Tech.

“Blanket tax rates that lack nuance – that do not, for instance, take into consideration the size of the business and the weight of the tax liability it must bear – require a serious review,” the group said.

“For the sake of our industry, and the thousands of small businesses that call it home, we welcome any call from the government to reassess how excise policies can help create a business-enabling environment.”

This echoes similar calls by the Beer Association of South Africa (BASA), which said that South Africa should introduce an excise tax sliding scale based on beverage type and alcohol strength similar to other countries.

“It is clear that another excise increase above inflation could serve as the final nail in the coffin for these and other businesses across the beer value chain who are still trying to make up the revenue lost during the bans while being faced with other increased input costs including fuel and electricity hikes,” the association said.

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At the other end of the spectrum, the Southern African Alcohol Policy Alliance (SAAPA) has called on the government to increase the excise tax on alcohol which it says will curb consumption.

The lobby group said that this should be combined with other measures including: Reducing the availability of alcohol by limiting the number of outlets; Reducing operating hours; and Raising the legal drinking age.

It also advocated for the increment of price of alcohol through means additional to excise tax such as introducing minimum unit pricing (MUP) and limiting container sizes; and limiting or banning alcohol advertising and sponsorships.

“The alcohol industry isn’t a philanthropic organisation. It exists to make a profit and generate dividends for its shareholders,” it said.

“It’s a business and that’s what businesses do. This means it cannot be expected to do anything that will threaten its profit levels and disappoint its shareholders. This is why self-regulation doesn’t work. This is why government intervention is needed.”

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