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South African Breweries (SAB) has warned that repeated above-inflation increases in alcohol excise duties could fuel the illicit alcohol market, urging National Treasury to adopt an inflation-linked framework for future tax increases. In a statement issued after the National Treasury’s stakeholder consultation on the future alcohol excise policy framework, the country’s biggest brewer said annual excise adjustments should be linked to the consumer price index (CPI), arguing this would preserve government revenue in real terms while providing businesses, investors and consumers with greater certainty.This view echoes calls from other industry participants who have urged Treasury for the link and introduction of incentives for lower-strength alcoholic drinks, reported the Sunday Times. The consultation, held last week, forms part of the Treasury’s review of South Africa’s alcohol excise policy. The proposals include changes to alcohol taxation, a more progressive excise structure across beverage categories, and measures to encourage the production and consumption of lower-strength alcoholic drinks to reduce alcohol-related harm.SAB said it supports a clear and fair excise tax system that helps the government raise revenue while also supporting investment, business growth and job creation.“Linking annual excise adjustments to inflation is a fair and predictable approach that protects government revenue while giving businesses the confidence to invest, create jobs and plan for the future,” said SAB vice-president of corporate affairs Zoleka Lisa.SAB said recurring above-inflation excise increases would have consequences beyond alcohol prices, arguing they would place additional pressure on consumers while creating uncertainty across the beer value chain. It said the impact would be felt by farmers, suppliers, retailers, hospitality businesses and the thousands of jobs linked to the industry.The brewer also argued that widening the price gap between legal and illicit alcohol could strengthen the illegal market. It said this would undermine tax compliance, reduce government revenue, and place further pressure on businesses that operate within the law.According to SAB, linking excise adjustments to inflation would preserve the real value of tax revenue without imposing excessive increases. It said a more predictable framework would allow businesses to plan for the long term, encourage investment in manufacturing, and strengthen confidence throughout the beer industry.The company added that several international markets already use inflation-linked excise systems to maintain government revenue while providing greater certainty for legal alcohol producers.“South Africa has an opportunity to implement an excise system that balances revenue collection with economic growth. A predictable framework aligned to inflation can support consumers, businesses and government alike while helping to create the certainty needed for investment and sustainable growth.”Lisa said the brewer would continue engaging with National Treasury and other stakeholders as work on the new excise policy framework continues.Entities like the DG Murray Trust have warned against framing the debate around illegal trade, arguing this creates an impression that government is incapable of enforcing the law and ignores the substantial evidence showing that pricing, availability, and marketing regulations can reduce alcohol-related harm.
