“Time to Beer Up: UCT Researchers Demand Stronger Taxes to Tackle Alcohol Harm”
Cape Argus reports:
“With the nation facing a staggering burden of alcohol-related harm, experts argue that the National Treasury’s proposed tax reforms simply don’t cut it – especially when it comes to beer.”
“In an analysis by the university’s Research Unit on the Economics of Excisable Products (REEP), experts argue that National Treasury’s proposed alcohol tax reforms do not go far enough, particularly when it comes to beer. They recommend narrower excise tax tiers, higher uplift factors and predictable above-inflation tax increases to meaningfully reduce alcohol consumption while still boosting government revenue.”
“In the 2025/26 financial year, beer is taxed at a flat rate of R145.07 per litre of absolute alcohol. Treasury’s proposal introduces three beer tax tiers, with progressively higher excise rates for products with higher alcohol content. However, REEP researchers argue that the thresholds are poorly aligned with the market.”
“‘These thresholds are poorly aligned with AA levels in the beer market because most beers – more than 95% of market share by sales volume – have an alcohol content between 4% and 6% AA,’ said Vellios. ‘As a result, Treasury’s proposal is unlikely to incentivise meaningful reformulation or reductions in alcohol content.'”
Assessment
In November 2024, South Africa’s National Treasury published a decadal discussion paper reviewing how alcohol should be taxed over the next decade – a separate and more consequential process than the annual inflation-linked alcohol excise tax increase announced in this week’s budget (covered elsewhere in this snapshot). The political decisions about how to design the alcohol tax system and structure that will be made in this process will shape alcohol pricing policy for years to come.
REEP’s central finding is striking: the Treasury’s proposal would reduce absolute alcohol consumption by only 2%, while REEP’s alternative – using narrower tax tiers and steeper rate increases between tiers – would achieve a 16% reduction while still increasing revenue by 13%. That is an eightfold difference in public health impact for a comparable revenue outcome.
Beer dominates South Africa’s alcohol market yet is taxed at roughly half the rate applied to spirits. Among South African adults who use alcohol, 47% engage in high-risk heavy episodic use – and beer is central to that pattern.
The Treasury’s proposed three-tier system sets thresholds that miss the market reality: over 95% of beer sold falls within the 4%–6% alcohol range, meaning virtually all products would land in the same tier. The practical effect would be minimal pressure on beer producers to reformulate and lower the alcoholic strength of beer and little incentive for consumers to shift to lower-alcohol products.
REEP also called for scrapping the current system in which target tax rates are set based on industry-supplied retail price data – a structural conflict of interest that gives alcohol producers direct influence over the benchmarks used to determine their own tax rates. REEP further flagged the need for a dedicated tax category for instant beer powder (a dehydrated powder intended to be mixed with water to produce a fermented beverage similar to beer). This emerging product currently falls outside existing frameworks.
For alcohol policy advocates in South Africa, this research provides evidence to strengthen submissions during the Treasury consultation process. The key message is simple: Treasury’s alcohol tax reform is poorly designed because it risks leaving most of the public health benefits of raising alcohol taxes on the table.
Advocates can cite REEP’s modelling to make the case for a better system: narrower tiers, higher uplift factors, and the removal of industry-linked benchmarks – turning an inadequate reform into an effective one.