South African government proposes 'drastic excise tax increases' on wine

By James Lawrence

Published: 27 November, 2024

The government of South Africa has published a policy review on the taxation of alcoholic beverages, with plans to increase excise tax in the forthcoming 2025 Budget.

Containing a number of significant policy changes and amendments to the regulatory landscape, the document outlines plans to raise tax rates by up to 80%, partly to “reduce the harmful use of alcohol”.

South Africa Wine, the national body representing the country’s wine grape producers and industry stakeholders, has nonetheless condemned the proposal, stating that it “poses a severe threat to the sustainability of the wine sector and its significant socio-economic contributions”.

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According to Rico Basson, CEO of South Africa Wine: “These proposals could devastate our industry, driving job losses and forcing producers out of the market.”

“He added: “The Budget, contributes R56bn to the economy, and plays a vital role in rural development. The proposed excessive increases in excise rates will destabilise this critical sector and harm communities already facing economic hardship.”

The government will announce the new excise framework and proposed adjustments during the Budget Speech in February 2025.

It has also given stakeholders an opportunity to register their concerns, with a submission deadline of 13 December 2024.

“We urgently call on the government to extend the deadline and reconsider these proposals,” said Basson.

“The current excise regime, aligned with international standards, is achieving public health and revenue goals without compromising the industry’s sustainability. Instead of penalising compliant producers, the government should focus on combating illicit trade and strengthening law enforcement.”

As reported in Harpers, South Africa's government issued several bans on the sale of alcohol during the pandemic, arguing they were necessary to prevent the abuse/misuse of alcohol during lockdown.

However, Basson stated that the illicit alcohol trade, which already accounts for more than 22% of all alcohol in South Africa, will simply be exacerbated by high excise rates.

“It threatens public health, erodes government revenue and undermines legal businesses. South Africa Wine emphasises that addressing this issue through improved oversight and enforcement would be a more effective policy approach,” he claimed.

“From an international perspective, we can learn from other wine-producing countries, such as France, Italy and Spain, which have almost zero excise rates. We view the wine and tourism strategy as a treasure trove… now is the time to encourage investments and erase any doubt from an investor’s perspective.”

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