National Treasury is mulling changes in how beer is taxed, a move that could see excise duties on malt beer – the most consumed liquor beverage in the country – increase by up to 20%. It has also been advised to scrap a R6,15 per litre flat excise duty on wine and consider taxation based on alcohol content, with higher excise duties levied on stronger wines.
Treasury engaged liquor industry stakeholders at tax review workshop on Thursday, the second such meeting in an ongoing consultation process.
Top of the agenda was a proposal from the University of Cape Town’s Research Unit on Economics of Excisable Products (REEP) in response Treasury’s Review of Alcohol Taxation Policy. The meeting was attended by various research institutions, civil society and health groups including World Health Organisation as well as the major beer and wine producers, including brewing giants SAB and Heineken.
The government is seeking to develop a policy that curbs harmful drinking while balancing economic impact. Industry players have, however, warned that excessive sin tax increases are fuelling the illicit industry, costing the fiscus billions in lost tax revenue.
REEP has proposed that excise duties be increased by up to 20% for beers with higher alcohol content (4%-6% alcohol by volume) to reduce consumption of drinks with a high alcohol content and push industry innovation to lower alcohol content beers.
According to sources who were at the meeting, REEP researcher, Mxolisi Zondi said 95% of local beer brands were of alcohol strength of between 4%-6% alcohol by volume (abv). According to him, increasing tax in this category would drive companies to reformulate their brands to trade below the 4% abv mark.
He told the meeting that similar changes had been implemented in Australia and United Kingdom, with companies like Heineken and Carlsberg lowering the ABV of their popular beers to 3,4% abv in UK to benefit from a lower tax bracket.
With beer being the most consumed alcoholic beverage in the country, Zondi is said to have argued that the current flat tax rate for all beers was ineffective in reducing consumption or encouraging companies to promote low alcohol content beer.
More encouraging for Treasury, he said national revenue from beer tax would not decline but would increase by up to 12,9%.”
On wine, the proposal was to move from the current flat taxation rate of R6,15 per litre, irrespective of abv level.
Treasury is said to have been concerned about the lack of equity in the system where wines with low abv pay the same amount of R6,15c a litre as high strength wines.
SAB said on Friday it supported “fair, balanced and predictable tax reform that incentivises lower-alcohol products, while protecting the sustainability of the country’s legal alcohol market”. The company, however, cautioned that any proposed reforms must account for the growing threat posed by illicit alcohol, which represents about one in every five alcoholic beverages in South Africa.
“Illegal products are on average 37% cheaper than legal alternatives. When tax policy increases the cost of legal products without addressing illicit supply, it does not reduce consumption, it redirects it underground.
“In particular, SAB is deeply concerned by the proposed 20% increase in standard beer in the current environment,” said SAB vice president of corporate affairs Zoleka Lisa.
“South Africa cannot tax its way to better public health outcomes if illegal alcohol fills the gap.
The South African Alcohol Policy Alliance’s Nomcebo Dlamini said, “Products with higher alcohol content should attract higher taxes. This will encourage manufacturers to produce lower alcohol products and help to reduce the consumption of stronger alcohol beverages
associated with greater harm.”
Heineken, which owns high volume wines like 4th Street and Drostdy-Hof, is said to have opposed any changes to the current flat rate tax for wine, stating that “wine needs to be protected as a national asset”.
A Heineken Beverages spokesperson told Sunday World, “In our view, the inflation-linked excise increase announced by minister Godongwana in the 2026 Budget was an appropriate response in the current socioeconomic context.
“The proposal to increase beer excise rates by 20% and wine rates by between 40% and 80% represents a significant departure from this.”
Sibani Mngadi, corporate relations director at the world’s largest producer of premium spirits, Diageo, said: “The effort to bring some level of equity in the distribution of the tax burden across various categories is welcome.
Lucky Ntimane, convenor of the National Liquor Traders Council, said alcohol taxes should remain inflation-linked, warning against over-reliance on hikes to curb abuse.
- National Treasury is mulling changes in how beer is taxed, a move that could see excise duties on malt beer – the most consumed liquor beverage in the country – increase by up to 20%.
- It has also been advised to scrap a R6,15 per litre flat excise duty on wine and consider taxation based on alcohol content, with higher excise duties levied on stronger wines.
- Treasury engaged liquor industry stakeholders at tax review workshop on Thursday, the second such meeting in an ongoing consultation process.
- Top of the agenda was a proposal from the University of Cape Town’s Research Unit on Economics of Excisable Products (REEP) in response Treasury’s Review of Alcohol Taxation Policy.
- The meeting was attended by various research institutions, civil society and health groups including World Health Organisation as well as the major beer and wine producers, including brewing giants SAB and Heineken.
