JOHANNESBURG — The National Treasury’s latest South Africa alcohol tax proposal has ignited a fierce debate, with industry leaders warning the measures could inadvertently fuel the illicit alcohol trade, while public health advocates champion the reforms as a critical step toward reducing societal harm.
The National Treasury is currently reviewing the country’s alcohol taxation framework. The proposed overhaul introduces a graded access system that would tax beer and wine based on their specific alcohol content. This strategy aims to incentivize manufacturers to reformulate their products with lower alcohol levels, encourage consumers to choose lighter options, combat illicit trade, and ultimately boost government revenue collection. The review suggests this shift could potentially increase beer taxes by up to 20%.
However, the Beer Association of South Africa (BASA) cautions that this well-intentioned move could lead to severe unintended consequences, including potential losses in jobs, investment, and legitimate tax revenue. Nirishi Trikamjee, Interim CEO of the Beer Association of South Africa, highlighted the economic and safety risks of such a policy shift.
“Whenever one does any rash or very large tax increases, we run the risk that the price of beer versus the price of illicit beer, the gap between the two becomes much wider,” Trikamjee explained. “That would then force people into an illicit market. And as we know in an illicit market, nobody wins. The government loses, as well as the industry, as well as consumers who are not protected by the quality standards that obviously take place in large, regulated manufacturers.”
On the ground, consumers hold mixed views regarding the Treasury’s proposal. Some acknowledge that reducing alcohol volume—such as lowering a popular lager from 5.5% to 4.5%, or a stout from 6%—might be beneficial. However, they remain skeptical about its broader social impact, citing ongoing violence and instability in marginalized communities. Other consumers expressed skepticism about the policy’s effectiveness, arguing that higher prices will not deter drinking. They noted that individuals seeking pleasure will simply spend more money to achieve the same effect, raising questions about whether tax hikes will actually change deep-rooted consumer behavior.
Conversely, the Southern African Alcohol Policy Alliance (SAAPA) has welcomed the proposed amendments, pushing back firmly against the industry’s warnings. Aasielah Maker Diedericks, Secretary-General of SAAPA, argued that the industry is deliberately diverting attention from the urgent need to change the tax regime.
“We acknowledge that there is some illicit alcohol consumption,” Diedericks stated. “However, the stats show that the industry is still making their profit. So, if they are making their profit, we’re not sure where the stats come from around people drinking more illicit instead of the currently commercially brewed alcohol. We must understand that the harm that we experience in this country, in the main, comes from the consumption of legitimately commercially brewed alcohol.”
SAAPA also noted that statistics indicate 60% of South African alcohol consumers drink at harmful levels. The alliance further accused the industry of being part of a supply chain that enables unlicensed trading in townships, despite rarely raising it as a problem in the past.
Despite the sharp disagreements over taxation and market dynamics, both the alcohol industry and the alcohol policy alliance find common ground on one critical issue: the lack of police enforcement significantly contributes to the broader alcohol abuse problem in the country.
