Will Your Wallet Survive the Treasury’s New Alcohol Tax Hike Proposal for the 2025 Budget Speech?
(The Post News)- On November 13, 2024, the South African National Treasury released a discussion document titled A Review of the Taxation of Alcoholic Beverages in South Africa, called for South Africans input on possible changes to the country’s alcohol excise tax structure. Treasury acknowledged that to in order to limit the harmful effects of alcohol usage and stop the illegal alcohol trade, an alcohol tax policy is required. The statement came at time when the country is facing consequences of harmful drinking habits.
The World Health Organization claims that alcohol use is a leading contributor to the global burden of disease and causes millions of deaths every year. The revised tax policy was prompted by the government’s desire to encourage a healthy population and growing concerns about the negative social and health impacts of alcohol use.
The report identifies several problems with the current tax structure. Beer, wine, and spirits now have different excise taxes depending on their retail value. Wine, beer, and spirits are subject to a 23%, 35%, and 48% consumption tax burden (excise tax + VAT) imposed by the Treasury. Although these rates are intended to strike a balance between generating income and societal expenses, they have come under fire for failing to sufficiently address more general problems such as underage alcohol use, and the growth of illegal alcohol sales.
The report identifies several problems with the current tax structure. Beer, wine, and spirits now have different excise taxes depending on their retail value. Wine, beer, and spirits are subject to a 23%, 35%, and 48% consumption tax burden (excise tax + VAT) imposed by the Treasury. These rates drawn criticism for not doing enough to address broader issues more general problems including binge drinking, underage alcohol consumption, and the surge in illegal alcohol sales, even though they are intended to strike a balance between earning money and covering society’s expenses.
The Treasury is accepting written comments on the discussion document through December 13, 2024. This feedback will be taken into consideration while revising the preliminary recommendations, which are anticipated to be included in the 2025 Budget Speech. Stakeholders are encouraged to provide feedback on the potential impacts of the proposed modifications, including public health activists, corporate executives, and members of the public.
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