Taxation one of strategies ‘to keep alcohol consumption down’

Then strict lockdown regulations took away people’s booze, they felt the pain, as did the economy to the tune of
around R8 billion.

Now, people should prepare to feel pain in their wallets and purses again as Finance Minister Enoch Godongwana eyes excise taxes – the so-called sin taxes – ahead of his budget speech on 24 February, after President Cyril Ramaphosa’s State of the Nation Address on 10 February.

And while the National Liquor Traders Association (NLTA) has called on government to scrap any plans of increasing excise tax on alcohol, experts say a hike is necessary to reduce consumption in SA. NLTA convenor Lucky Ntimane
stressed the importance of the sector in preserving jobs following years of an underperforming economy, worsened by the impact of lockdowns.

“Taverns will not accept tax hikes on liquor going forward. We call on 0% excise increase to support recovery efforts of the tavern sector,” Ntimane said.

“A solid plan and leadership is required to support small businesses in the country and the upcoming budget speech carries with it real risk that liquor traders will once again be punished through the increase in sin tax.”

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But is the money raised from alcohol and cigarettes going to where it could do the most good, where alcohol is responsible for many tragedies in the country?

According to the South African Medical Research Council’s Prof Charles Parry, SA was the sixth-highest nation in the world in terms of the amount of alcohol consumption per capita, which proved that the country had a huge problem.

“From a public health point of view, the government has to continue to raise taxes on alcohol as a public health measure and that’s even more important than the liquor traders’ concerns, because we have such a huge problem with alcohol,” Parry said.

“Particularly with trauma in our hospitals, we have a problem,” he said.

“We probably have too many liquor traders and too much alcohol being sold so it’s a very complex problem and taxation is one of the strategies to keep consumption down.

“The taxes are really small when they go up, they go up by inflation, so we don’t really want to make alcohol
cheaper, because we do have a huge alcohol problem.”

“The money goes into the general fiscus and the government uses some of it for the treatment of alcohol problems and paying for ambulances and other stuff.

“However, I would love to see more of it dedicated to dealing with alcohol, which would be something to support so that it doesn’t get lost in the general fiscus.”

However, the South African research chair in industrial development and professor of economics at the University of
Johannesburg, Prof Fiona Tregenna, said although there was a need for taxes to reduce consumption, the industry was currently at its lowest.

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“So-called sin taxes have the dual purposes of seeking to discourage excessive consumption of goods such as alcohol that have negative effects on society and individuals, while also raising revenue,” Tregenna said.

She said the revenue could be used to contribute to meeting South Africa’s pressing needs – better healthcare, schools, police and so on.

“There is certainly scope for higher sin taxes. Having said that, we need to recognise that the hospitality industry is in a weak position after the past two years and does need to benefit from economic stimulus and support, especially to preserve jobs in the sector,” she said.

“With the restrictions on alcohol sales during the Covid lockdowns, we saw the positive effects of lower alcohol consumption, such as in lower violent crime and hospitalisations.”

– reitumetsem@citizen.co.za