Industry body SA Wine has warned that above-inflation tax increases on alcoholic drinks announced in Wednesday’s budget will only serve to fuel the black market.
The industry had asked the Treasury to increase so-called sin taxes in line with inflation, which the Treasury has forecast at 4.9% for 2024.
Finance minister Enoch Gondwana on Wednesday announced a 7.17% hike in the excise on wine, 7.17% on sparkling wine and 6.67% on brandy.
SA wine said the increases indicated the Treasury did not appreciate the industry’s importance in the economy, including providing many jobs in rural communities.
The tax on a can of beer or cider was increased by 14c, while a bottle of wine will cost 28c more. The price of spirits, including whisky, gin and vodka will rise by R5.53 per 750ml bottle as a result of the tax increases.
Electronic nicotine delivery systems, or vapes, will cost R3.04 more per millilitre while the price of a pack of cigarettes rises by 97c.
Wine growers have faced tough times in recent years with Covid-related bans on sales during 2020 and 2021, while costs have risen as a result of load-shedding and higher fertiliser prices increasing. In addition, exports have been constrained by port disruptions.
“We are extremely disappointed that the government did not heed our industry’s plea. SA Wine has been in discussions with Treasury over the past few months, where we emphasised the serious position of our industry and requested that inflation-based excise taxes be introduced, said spokesperson Christo Conradie.
The wine industry has pointed out that there is a large and growing market for illicit alcohol that while offering cheaper products could also be more harmful.
Excise rates have more than doubled since 2010, even as SA’s recorded alcohol consumption per head has remained relatively static according to World Health Organisation figures.
Heineken, the world’s second-biggest brewer, reported last week that revenue from its SA operations, which include Windhoek beer, Savanna cider and 4th Street wines — declined by single digits in its most recent financial year.
“When prices rise faster than incomes, people can afford fewer goods and services. Cheaper goods, including illicit and black-market products, become more tempting,” said Conradie.
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