The SA Liquor Brand owners Association (Salba), which represents large liquor manufacturers including Heineken and Pernod Ricard, has again asked the SA Revenue Service (Sars) to allow the liquor industry to delay paying excise taxes until the alcohol ban is lifted.
Alcohol attracts sin taxes that make up a big part of the selling price and are paid when the alcohol is produced and stored rather than when it is sold.
Salba says the industry is facing an “enormous financial crisis” as it is still producing and paying tax while not making any sales.
The industry says it pays an average R2.5bn a month in excise duties excluding VAT, equating to 3.4% or R173bn of SA’s GDP.
Apart from the request being one way to improve cash flow, when industry players have high fixed production and salary costs, it also puts pressure on the government to lift the latest and fourth outright ban.
Salba chair Sibani Mngadi said: “One of the few survival options to avoid short-term liquidity challenge is to hold back on accounts payable of which monthly excise tax payments are a big chunk. We hope Sars will be understanding.”
The organisation also asked that if the fourth ban is extended beyond the initial 14 days, any tax deferment should remain in place until sales are allowed again.
The industry received a R5bn deferment from the Treasury after the second alcohol ban in July and August, but its request for a blanket tax deferment during the third lockdown that ended in February was unsuccessful. Individual companies made their own arrangements with the Treasury.
Salba said the industry plays an invaluable role in the economy, supporting more than 35,000 township-based businesses such as taverns, over 10,000 bottle stores, and more than 22,500 restaurants, hotels and wine estates.
“With no economic measures having been put in place, the hospitality, tourism and alcohol industries will continue to bear the brunt of the cycle of lockdowns and alcohol bans which looks likely to continue until we have sufficient numbers of the population vaccinated,” Mngadi said.
The industry has said it is not trying to downplay the Covid-19 third wave, but has asked the government to better balance saving lives and livelihoods and said that increasing vaccinations would be more effective in preventing deaths than targeting the alcohol and hospitality industries.
Data from the Western Cape provincial health department among a select group of unnamed hospitals showed that when alcohol was banned in January, trauma cases decreased.
However, private hospital group Mediclinic said last week it had not experienced a big change in alcohol-related admissions at its trauma units when alcohol bans were implemented or lifted.
Wine industry body Vinpro has calculated that a bottle of wine that sold for R45 in 2020 earned the government R10.04 in excise taxes and VAT.
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