SA wine industry challenges proposed excise tax hike
South Africa Wine, a representative body within the South African wine industry, has strongly opposed the proposed 6.83% increase in excise tax on alcoholic beverages, as outlined in the recent Budget Speech but not formally tabled. The increase exceeds the latest Consumer Price Index (CPI) by more than 3.5%, adding further strain to an industry that is still recovering from economic pressures.
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Over the past few months, South Africa Wine has been engaging with policymakers, urging fair taxation and policy certainty to ensure the long-term sustainability of the wine industry.
They have stated that the industry’s current excise tax already meets the guidelines set by the National Treasury and emphasise that future adjustments should align with inflation to maintain stability for businesses and workers within the wine value chain.
Risks to industry recovery
The proposed increase may impact the industry's recovery, potentially affecting job security, investment, and economic contributions in both rural and urban communities. There are concerns that it could also lead consumers toward illicit alcohol markets, following trends seen in other sectors, such as tobacco, where illicit trade now accounts for nearly 65% of sales.
"This proposed above inflation increase directly contradicts President Cyril Ramaphosa’s economic growth targets set out in his State of the Nation Address (Sona)," says Rico Basson, CEO of South Africa Wine.
"At a time when the government aims to exceed the current GDP growth through investment and economic reform, imposing an above-inflation excise tax increase risks doing the opposite—stifling growth, discouraging investment, and threatening thousands of livelihoods in the wine value chain."
South Africa Wine is urging the National Treasury to reconsider the proposed excise tax hike and adhere to the established practice of linking tax adjustments to the Consumer Price Index (CPI). The organisation emphasises that a fair and transparent approach is crucial for the success of the wine industry, which plays a key role in job creation, rural development, tourism, and export earnings.
With the final 2025/26 Budget Speech scheduled for 12 March 2025, South Africa Wine has expressed its willingness to collaborate with the government on creating a balanced taxation framework that ensures public revenue while supporting the industry's long-term sustainability.
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