South Africa is planning bold steps to better prevent alcohol harm. The National Treasury has proposed raising alcohol excise taxes and introducing an alcohol floor price to reduce population-level alcohol use and related social, health, and economic harms.
In line with the 2023 Medium Term Budget Policy Statement (MTBPS), tax increases are proposed to alleviate immediate fiscal pressures. The proposals include… higher excise duties on alcohol and tobacco products.
These measures will contribute to a more stable fiscal position with long‐term benefits for the economy.”
National Treasury 2024 Budget Review
Many community groups, including Movendi International members in South Africa, support these plans. However, the alcohol industry – motivated purely by profit greed – opposes the plans, disregarding the harm their products cause to individuals, families, and society.
Alcohol: The Root of South Africa’s Crisis
Alcohol fuels violence, crime, and economic destruction in South Africa. According to a 2018 World Health Organization (WHO) report, 59% of South Africans who consume alcohol engage in binge alcohol use, contributing to high rates of violence, disease, and economic strain. In fact, alcohol plays a leading role in gender-based violence (GBV), with research showing that men with alcohol problems are three times more likely to perpetrate GBV, and women whose partners regularly consume alcohol are six times more likely to experience violence.
In addition, alcohol is also a major driver of trauma-related hospital admissions. For instance, GroundUp revealed that hospitals reported a dramatic drop in trauma cases during the COVID-19 pandemic when alcohol availability declined because the government instituted temporary alcohol bans.
Furthermore, South Africa has the highest reported rate of Fetal Alcohol Syndrome Disorder (FASD) in the world. Fetal Alcohol Syndrome Disorder (FASD) is a severe, lifelong condition caused by prenatal alcohol exposure, leading to brain damage, growth deficiencies, and developmental disabilities. This evidence shows that the alcohol industry profits while children suffer irreversible cognitive and physical consequences.
In addition, a 2014 study estimated that alcohol costs South Africa up to 12% of its GDP due to losses from tangible and intangible alcohol harm, including crime, lost productivity, and healthcare costs.
The products and practices of alcohol companies in South Africa harm people, destroy lives, and their business model thrives on addiction and other diseases.
Experts therefore argue improving South Africa’s alcohol laws is urgently needed, including making alcohol less affordable, and putting common sense limits on alcohol availability, through reducing outlet operating hours.
Treasury’s Plan to Rein in the Alcohol Industry
Recognizing the severe damage caused by alcohol, the National Treasury has proposed the following:
- Raise excise taxes on spirits by 6.83%, which is more than double the current inflation rate of 3.2%.
- Adjust taxes on wine and beer to align with inflation, ensuring the alcohol content is taken into account when setting the tax level so that alcohol products with lower alcohol strength remain relatively affordable compared to alcohol products with higher alcohol strength.
- Introduce a minimum unit pricing system (MUP), setting a legal floor price below which alcohol cannot be sold.
The Treasury acknowledges that its current tax structure is outdated and must change to reflect the public health crisis caused by alcohol. This proposal directly targets the alcohol industry’s ability to manipulate prices, push promotions, and drive up alcohol consumption – without paying for the harm these practices and products cause.
Excise duties on alcoholic beverages and tobacco‐related products
In the 2024 Budget Review chapter on Revenue Trends and Tax Proposals, the South African Treasury proposes alcohol excise tax increases and outlines revenue projections.
The guideline excise tax level of the weighted average retail price for alcohol products are planned as follows:
- wine: 11%
- beer: 23%, and
- spirits: 36%.
The government writes in their National Treasury 2024 Budget Review that “excise duties have increased more than inflation in recent years resulting in a higher tax incidence.”
The South African Government proposes to increase excise duties on alcoholic beverages by between 6.7% and 7.2% for 2024/25.
Impact of tax proposals on medium‐term revenue
The proposed budget contains tax increases of R15 billion in 2024/25 to alleviate immediate fiscal pressure and support faster debt stabilisation.
With the planned alcohol excise tax increases, the contribution of alcohol taxation to government revenue will increase in the coming years, according to the government
As specific excise duties, the government plans for above‐inflation increase in excise duties on alcohol to generate significant revenue:
- R800 million in 2024/25,
- R851 million in 2025/26,
- R904 million in 2026/27.
Support from Alcohol Policy Activists
Many community groups, including Movendi International members in South Africa support these plans. And alcohol policy advocates have welcomed these plans.
Aadielah Maker Diedericks, secretary general of the Southern African Alcohol Policy Alliance (SAAPA), praised the Treasury for incorporating an “alcohol harms lens” into its policy framework.
The DG Murray Trust (DGMT) also supports the proposed changes. Citing research by University of Cape Town economists, it emphasises that a minimum price of R6 per alcoholic unit could reduce binge alcohol use by 6.2%.
Both organizations are also calling for the revival of the stalled Liquor Amendment Bill, which seeks to tighten alcohol sales and advertising regulations (see draft bill PDF).
The Alcohol Industry’s Lies and Interference
The alcohol industry is already attempting to interfere against and derail these reform plans. For example, the SA Liquor Brand Owners’ Association (Salba) and Big Alcohol giants, such as Heineken and AB InBev are demanding more time to “review” the Treasury’s proposal. In reality, they are stalling to protect their profits while people continue to suffer.
Salba is the front group for multinational alcohol industry giants, such as Bacardi, Campari Group, Diageo, Heineken, and Pernod Ricard.
Salba falsely claims that tax increases will boost the illicit alcohol market. The truth is that illicit alcohol exists because the alcohol industry floods the market with ultra cheap alcohol, not because of taxation. Instead of supporting enforcement against illegal alcohol trade, companies use it as an excuse to resist and derail evidence-based alcohol policies.
Meanwhile, these corporations continue to rake in billions while South Africans suffer. The Sunday Independent reports that the legal alcohol industry extracts R96.9 billion from South Africa while fueling violence, addiction, and economic hardship. They claim to care about the economy, yet their products directly cost the country billions in lost productivity and healthcare expenses.
Making the Plans a Reality
South Africa’s plan to raise excise taxes on alcohol is a crucial step toward promoting people’s health and better protecting vulnerable communities from Big Alcohol’s predatory practices, such as pushing ultra cheap alcohol. Raising alcohol excise taxes will also increase the government’s revenue and reduce costs to society caused by alcohol harm.
With the Budget Speech scheduled for March 12, 2025, all eyes are on the National Treasury to see whether these proposals will become reality.
Sources
Bloemfontein Courant: “A Call for Alcohol Regulation”
Sunday Independent: “Over-taxing spirits fuels illicit trade, deepens budget woes”
GroundUp: “Activists welcome Treasury’s proposed minimum alcohol price”
National Budget Review 2024: Chapter 4
Daily Maverick: “Treasury Aims to Alleviate SA’s Drinking Problem by Raising Excise Tax on Alcohol”
The Conversation: “South Africa wants to make alcohol more expensive. Why it’s a good idea – health economist”