The South African government has proposed raising alcohol taxes in 2025 to lower population-level alcohol use and its devastating effects on public health, the economy, and society. This decision aligns with global evidence showing that higher alcohol prices lead to lower consumption, particularly among lower-income groups, and thus harms and costs.
Movendi International reported about these government plans previously.
South Africa has one of the highest rates of alcohol-related harm in the world, with alcohol fueling high rates of disease, crime, road fatalities, and gender-based violence. By increasing excise taxes, the government is taking a critical step toward promoting people’s health, protecting public safety, reducing economic costs, and preventing alcohol harm.
Alcohol Harm in South Africa: The Urgent Need for Action
South Africa’s alcohol crisis is well-documented. The country ranks among the highest globally in alcohol-related deaths, injuries, and social harm.
Key statistics highlight the severity of the problem:
- 60% of South African alcohol users aged 15 and older engage in heavy episodic alcohol use.
- 171 alcohol-related deaths occur every day. This amounts to more than 62,000 alcohol deaths per year.
- Alcohol contributes to 60% of fatal road crashes.
- 60% of gender-based violence cases involve alcohol.
These figures highlight the urgent need for more ambitious and comprehensive alcohol policy solutions. Public health experts agree that increasing excise taxes is the single most effective way to prevent and reduce alcohol harm.
What Changes Are Coming in 2025?
According to Daily Investor reporting, the National Treasury has proposed increasing excise taxes on alcohol by 6.75% across all categories, including:
- Beer, cider, and alcoholic fruit beverages,
- Wine and spirits, and
- Pipe tobacco and cigars.
These increases are expected to generate an additional R1 billion in revenue for 2025/26, rising to R1.13 billion by 2027/28. More importantly, they are aimed at reducing popualtion-level alcohol use and its devastating consequences.
Furthermore, the Treasury has also recommended exploring minimum unit pricing (MUP), which sets a price floor below which alcohol cannot be sold.
This policy prevents alcohol producers and retailers from offsetting tax increases by lowering prices or offering large discounts.
MUP is effective against Big Alcohol’s predatory practice of selling ultra cheap alcohol in South Africa – to hook as many people as possible on their products.
Why Higher Alcohol Taxes Work: Lessons from South Africa and Beyond
Raising alcohol taxes is a proven health promotion strategy. According to The Conversation and Movendi International, countries that have implemented similar measures have seen significant reductions in the alcohol burden they face.
- Scotland introduced MUP and saw a 13.4% decline in alcohol-related deaths and a 4.1% drop in hospital admissions. The most significant improvements were among lower-income people.
- Wales saw a 15% rise in alcohol prices and a 20% drop in alcohol purchases after introducing MUP.
- South Africa’s temporary alcohol bans during COVID-19 led to a 60% decrease in alcohol-related trauma cases in hospitals – showing how alcohol availability reductions help improve health and safety.
This means that South Africa has already experienced the positive effects of people-centered alcohol policies. The temporary alcohol sales bans during the COVID-19 lockdown provided a real-time example of how reducing the physical availability of alcohol leads to fewer hospital admissions, road crashes, and violent crimes.
Economic Impact: Big Alcohol’s Opposition vs. Reality
The alcohol industry is aggressively working against this alcohol tax increase and alcohol floor price. Alcohol lobbyists are pushing claims that higher taxes would harm jobs and the economy.
However, the reality is that alcohol harm costs South Africa far more than the alcohol industry generates in revenue.
In 2014, a landmark study showed that the combined total tangible and intangible costs of alcohol harm to the economy were estimated at 10 – 12% of the 2009 gross domestic product (GDP). The tangible financial cost of harmful alcohol use alone was estimated at R37.9 billion, or 1.6% of the 2009 GDP.
But more recent data, as for example reported by the Daily Investor shows that alcohol’s burden is even more severe than that:
- Alcohol harm costs the economy R250 million per day.
- That means the estimated annual cost of alcohol harm in South Africa is R91.25 billion (approximately €4.61 billion).
- Alcohol-fueled crime and health issues strain public resources and healthcare systems.
- A 40% excise tax increase on beer alone could generate over R14 billion annually, funds that could be invested in healthcare, education, and alcohol prevention programs.
Despite pushback from Big Alcohol, the economic benefits of alcohol taxation are massive and hold the potential for South Africa to boost people’s health and sustainable development.
Movendi International has created an overview of data showing the economic burden of alcohol around the world. It shows that South Africa is not alone facing such massive economic costs caused by alcohol. This special feature details the economic harm caused by the alcohol industry in OECD countries, and specifically in Norway, Australia, Canada, Germany, Sweden, France, the Netherlands, New Zealand, and the UK, the United States, as well as low- and middle-income countries, such as Sri Lanka and India. The Special Feature also explores concrete types of economic harm, such as workplace harm and productivity loss, as well as loss of economic growth, healthcare spending and more.
In 2023, a landmark study revealed the flawed claims the alcohol industry deploys to block and derail alcohol taxation initiatives.
The study discusses the economic rationale for taxing these products and documents the health effects and costs to society. It presents evidence on the effectiveness of taxation in raising prices and reducing consumption, along with showing how considering health benefits and indirect financial effects, taxation disproportionately benefits poorer households. The study also considers the role of industries in opposing taxation. The article addresses the claims used by the industry to attack alcohol taxation.
In summary, the study shows:
- Health taxes (on tobacco, alcohol, and SSB) are effective economic instruments to change people’s behaviour and reduce the consumption of unhealthy products.
- The article summarises and critically discusses the large body of evidence regarding the effect of taxes on reducing the consumption of tobacco, alcohol, and sugar-sweetened beevrages (SSB).
- The article also provides consolidated evidence regarding the lack of economic substance behind common claims that industries use to oppose these taxes (eg, illicit trade, negative effects on employment, regressivity).
Where Should the Additional Revenue Go?
To maximise the benefits of the tax increase, the government should reinvest the revenue into alcohol prevention and treatment, as well health promotion initiatives, such as:
- Community empowerment and social movement mobilization for local actions to prevent and reduce harm, engage communities, and address grass-roots concerns about specific alcohol issue.
- Healthcare services for people with alcohol use disorders.
- Improved monitoring, surveillance, and evaluation of alcohol harm and alcohol policy impacts to drive evidence-based alcohol policy making.
- Meaningful infrastructure at the government level to coordinate, assess, and improve responses to alcohol harm, including civil society and academia.
- Improved enforcement of alcohol regulations to prevent underage sales, illegal alcohol marketing, and illegal trade.
- Public awareness campaigns that complement population-level alcohol policy solutions by increasing the recognition of people regarding the risks of alcohol and the benefits of alcohol policy actions.
In 2023, WHO Europe reported the benefits of alcohol taxation that Northern European countries are reaping:
Taxation is another powerful measure that many Nordic countries use, not only to increase government revenue but also as a health measure. Even moderate increases in alcohol excise taxation in the Nordic countries have resulted in considerable health gains, as well as state revenues that can be used to invest in health care.
Taxation has also had an important role in protecting young people from the harmful effects of alcohol in the Nordics. High taxes on alcohol have been proven to reduce alcohol consumption and harm for all of society, including heavy alcohol users and adolescents. There is also evidence of the benefit of taxation in delaying when young people start consuming alcohol.”
WHO Europe “Reducing alcohol consumption, the Nordic way: alcohol monopolies, marketing bans and higher taxation”
A Step Toward a Healthier Population and Brighter Future
South Africa’s decision to raise alcohol taxes in 2025 is a crucial and evidence-based step toward better preventing alcohol harm.
With one of the highest rates of alcohol-related deaths and injuries globally, the country cannot afford to delay action. Therefore, the government must overcome alcohol industry interference and prioritise people’s health over Big Alcohol’s profit greed.
The evidence is clear: higher alcohol taxes save lives. By acting now, South Africa can make significant progress toward its goal of reducing alcohol use by 20% by 2030.
Sources
MSN Africa: “Sin taxes adjusted above the expected inflation rate“
Zawya: “South Africa’s Budget 2025: Sin taxes adjusted above the expected inflation rate“
YouTube: “The alcohol tax debate: Balancing income, jobs, and the illicit trade of alcohol”
Daily Investor: “Big problem with government’s new alcohol and tobacco taxes“
The Conversation: “South Africa wants to make alcohol more expensive: why it’s a good idea – health economist“