Should beer be taxed at lower rate than hard booze? SA beer association thinks so

The beer industry is lobbying government to change how beer is taxed compared with spirits. 

The Beer Association of SA (Basa) on Wednesday made a presentation to parliament’s standing committee on finance on its opposition to above-inflation increases in excise taxes.

The association said its submission focused on the negative impact of the increases on an industry that has already been devastated by the Covid-19 lockdown and four alcohol bans. 

According to the SA Liquor Brand Owners Association (Salba), the four bans placed on liquor sales during the Covid-19 pandemic have cost the country’s GDP an estimated R64.8bn.

The R64.8bn excluded the cost of recent looting in KwaZulu-Natal and Gauteng. More than R500m of liquor stock was looted during violence and destruction in the provinces.

Basa specifically raised complaints about excise tax, saying it should not be applied equally to all alcoholic beverages.

“One of the main functions of excise duties is to discourage the consumption of harmful products,” it said. 

“We, therefore, argued in the submission that there needs to be a distinction between beer as an alcoholic beverage with low alcohol by volume (ABV) of 2.8% to 6% alcohol, versus other alcoholic beverages with higher ABVs. 

“The beer industry has also demonstrated meaningful intent to further reduce the alcohol content in its products through the introduction of no- and low-alcohol beers.”

According to the association, it is a common practice in many countries to regulate alcoholic beverages based on the beverage type and alcohol strength.

It cited Australia, Canada, Denmark, France, New Zealand, Switzerland and the UK among the examples. 

“In order to ensure the long-term survival of the beer industry, which supports over 450,000 livelihoods, Basa is calling on government to consider either maintaining the current excise duty rate or a below inflationary increase in next year’s budget speech,” said Basa.