New alcohol tax for South Africa under fire

 ·22 Jan 2025

Liquor traders in South Africa are asking the government to rethink a plan to add a new charge on alcohol.

This idea, suggested by Deputy Transport Minister Mkhuleko Hlengwa, is meant to help reduce problems caused by alcohol, like accidents on the roads. However, many people in the alcohol industry think this plan is unfair and won’t work well.

The idea came up after Transport Minister Barbara Creecy shared some sad news about road accidents during the festive season.

She said there were 1,502 deaths during this time, which is 70 more than the previous year. Over 3,840 people were also arrested for driving drunk.

Both Creecy and Hlengwa pointed out that alcohol played a big role in these crashes. Drinking and driving, as well as walking while drunk, were major problems.

Hlengwa believes South Africa needs to talk more about how people drink alcohol. He thinks one way to stop dangerous drinking is by making it more expensive.

Talking to Newzroom Afrika, He suggested adding a charge for the Road Accident Fund (RAF) to the price of alcohol.

Right now, the RAF gets its money from fuel sales, but Hlengwa thinks alcohol should help pay for it, too, because it’s linked to so many accidents.

At the same time, in November 2024, the National Treasury proposed raising excise taxes on alcohol to curb excessive drinking in the country.

While the deadline for comments was first set for December 2024, it has been extended to February 2025.

However, many in the alcohol business feel this isn’t enough time to properly respond.

Groups like the National Liquor Traders and SA Wine think the government needs to do more research and talk to industry leaders before making such a big decision.

Deputy Transport Minister Mkhuleko Hlengwa

Lucky Ntimane, from the National Liquor Traders, agrees with making drinking safer, but he doesn’t think this plan is the right approach.

He feels the alcohol industry is unfairly blamed every time there’s a problem with drinking.

SA Wine agrees with the National Liquor Traders, noting that announcing these tax hikes in the 2025 Budget would be “premature and unfair.”

People who are against the new tax say it will make life harder for drinkers and businesses without fixing the real problems.

But others say there is proof that raising alcohol prices can save lives. In countries like Canada, Scotland, and Ireland, similar taxes and price rules have worked well.

For example, in Scotland, a rule called minimum unit pricing (MUP) led to a 13.4% drop in alcohol-related deaths and a 4.1% drop in hospital visits. The biggest improvements were seen in poorer communities where alcohol misuse is often worse.

In Wales, research found that when alcohol prices went up by 15%, people bought 20% less alcohol. These examples show that raising prices can help reduce the harm caused by alcohol.

But South Africa has its own challenges. Critics of the new tax worry that making alcohol more expensive won’t stop people from drinking too much.

Instead, it might hurt poorer people the most and push them to buy cheap, illegal alcohol, which is already a big problem in the country.

While higher alcohol taxes have worked in other countries, stakeholders in South Africa believe the government needs to look at the bigger picture.

They want more public education, stricter rules for drunk driving, and better research before any new tax is added.

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