A Taxing year for Beer, Minister it’s time to roll up our sleeves and recover the economy
The beer industry in South Africa has deeply seated roots in the economic landscape of our country. Our industry sentiment has always been to actively participate in the economy, resulting both in job and investment growth. We have also prioritized our resources to deaIing with the harmful consumption of alcohol as a means of abating the negative externalities to society that arise out of the supply and demand of alcohol.
The 2021 Medium Term Budget Policy Statement (MTBPS) presented today (11 November) charts a course that will enable South Africa to continue the difficult task set out in the 2020 MTBPS, of economic recovery. Our best bet in improving the country’s macroeconomic positon and removing the constraints on the fiscus, will be to focus on South Africa’s economic recovery, which is heavily reliant on creating an enabling regulatory environment that will attract investment and increase job opportunities for ordinary South Africans.
We appeal to the Minister of Finance, as we get a sense of the tax outlook from his Medium Term Budget, to critically review the nature and shape of excise taxes on the alcohol industry in the current economic climate. Above inflation increases in excise are contrary to economic recovery. The excise policy framework is more than a guideline; it provides the beer industry with the certainty it needs to plan its investments and in the current context, gives us a fighting chance to recover when we are granted some reprieve via excise taxes.
We therefore request that National Treasury grant in the medium-term a below or no inflation increase in excise to allow for our sector to recover and also as a means of tackling the growing illicit market that was further exacerbated by the alcohol bans.
The industry is still recovering from four alcohol bans and we cannot ignore the impact that pandemic and the related bans have had on the health of our sector. As a result, many of the craft breweries have closed their doors, and we have seen 265 000 jobs placed at risk.
The beer industry has been an active participant in the public policy space and has made several submissions as a means of addressing the shortcomings and gaps in the current excise tax policy. In particular, we continue to seek platforms that allow for fruitful engagement with government around the excise tax framework.
To that end we look forward to the release of the discussion paper by Treasury and the related stakeholder engagement process.