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New Alcohol Tax Plan Sparks Debate in South Africa: Industry Pushes Back

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Liquor traders and industry leaders are calling on the South African government to rethink a proposed alcohol tax that could see drinkers paying more to help fund the Road Accident Fund (RAF). The proposal, suggested by Deputy Transport Minister Mkhuleko Hlengwa, aims to curb alcohol-related road accidents but has sparked fierce opposition from the alcohol industry.

Why Was the Alcohol Tax Proposed?

The idea came after Transport Minister Barbara Creecy revealed alarming statistics about road accidents during the festive season. Over 1,500 people lost their lives in crashes—70 more than the previous year—and over 3,800 individuals were arrested for drunk driving.

Hlengwa, speaking on Newzroom Afrika, argued that alcohol significantly contributes to these tragedies. He suggested that adding a levy for the RAF to alcohol sales could help offset the cost of road accidents caused by drunk driving.

Currently, the RAF is funded through fuel sales. Hlengwa believes the tax burden should also fall on alcohol, given its link to road accidents.

Industry Pushback

Liquor traders, including the National Liquor Traders and SA Wine, have strongly opposed the proposal, arguing that the government is unfairly targeting the alcohol industry.

Lucky Ntimane of the National Liquor Traders said, “While we support initiatives to make drinking safer, this tax unfairly blames the industry for problems linked to irresponsible drinking.”

SA Wine echoed these concerns, calling the proposal “premature and unfair,” particularly with the government’s plans to announce further tax hikes in the 2025 Budget.

The alcohol industry has also criticized the short timeframe for public consultation. Initially, comments on the proposed excise tax increases were due by December 2024, but the deadline has been extended to February 2025. Industry leaders argue that more research and dialogue are needed before implementing any new taxes.

Does Raising Alcohol Prices Work?

Supporters of the new tax point to international success stories:

  • In Scotland, a minimum unit pricing (MUP) policy reduced alcohol-related deaths by 13.4% and hospital visits by 4.1%.
  • In Wales, a 15% increase in alcohol prices led to a 20% drop in alcohol purchases.
  • In Canada and Ireland, similar policies have shown measurable reductions in alcohol-related harm.

These examples suggest that higher alcohol prices can discourage excessive drinking and save lives, particularly in poorer communities where alcohol misuse is more prevalent.

Unique Challenges in South Africa

Critics of the tax warn that South Africa faces unique challenges that could undermine the policy’s effectiveness:

  • Illegal Alcohol Trade: Higher prices may push poorer individuals to purchase unregulated, illegal alcohol, which is already a major issue in the country.
  • Economic Impact: The tax could hurt small liquor businesses and negatively affect the livelihoods of those in the industry.

Instead of focusing solely on taxes, stakeholders are urging the government to take a more holistic approach to curb alcohol-related harm. Suggestions include:

  • Public Education Campaigns: Raise awareness about the dangers of drunk driving and excessive drinking.
  • Stricter Drunk Driving Laws: Enforce harsher penalties for drunk driving and walking while intoxicated.
  • Comprehensive Research: Conduct thorough studies on the potential impact of the proposed tax.

A Divided Nation

As the debate continues, South Africans remain divided on the new alcohol tax. While some see it as a necessary step to address the country’s drinking problem, others worry it could do more harm than good.

The government has until February 2025 to gather feedback and refine its plans. Whether the tax will effectively reduce alcohol-related harm without crippling the industry remains to be seen.

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