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Budget Speech: Calls mount for ‘no increase’ in alcohol excise taxes
Liquor associations are calling on government not to increase alcohol excise taxes as the industry is still recovering from Covid-19.
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The South African wine industry has appealed to the Treasury not to increase excise taxes in the upcoming National Budget Speech.
Vinpro which represents close to 2,600 South African wine grape farmers and wineries has also joined the same call by the South African Breweries (SAB) and Liquor Traders.
CALLS FOR GOVERNMENT TO LIMIT EXCISE TAXES
Vinpro Managing Director, Rico Basson said while the industry is slowly but surely recovering from the significant impact that domestic alcohol and travel bans had on their revenue streams, producers are also confronted with an exponential increase in input costs.
According to Vinpro, in 2020 the Government earned R6.1 billion from excise and Value Added Tax, compared to producers’ gross income of R5.8 billion.
Basson said that In light of the serious financial position in which the wine industry finds itself, it now needs stability, policy certainty and support.
“The reality is that the consumer won’t necessarily be affected by excise increases, as retailers often don’t implement the full increase in their retail selling price. This in turn means that wineries and wine grape producers would need to absorb the remainder of the cost hike along with the other increases they are already facing.
“We have also seen that an increase in excise duties (8% increase in 2021) fuels illicit trade (already 22% of the domestic liquor market) instead of acting as a deterrent for those who do not consume wine in a responsible way.
Vinpro MD, Rico Basson
The alcohol industry was one of the most affected by the alcohol bans and lockdown regulations. Many establishments had to close down or retrench staff.
According to Vinpro, the wine sector annually contributes R55 billion to GDP and provides employment to more than 265 000 people.
“While we take the Government’s hand to address major hindrances to production, processing and trade collectively, we call on the Government to take ours by not imposing any further cost hikes that will have an adverse effect on our industry,” Basson said.
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