South Africa Wine urges government to reconsider excise tax increase

The suggested hike, which could see rates soar by as much as 80%, is outlined in the recent Alcohol Taxation discussion document. The organisation warns that this drastic measure jeopardises the sustainability of the wine sector and its vital socio-economic contributions.

Industry concerns over proposed excise increases

South Africa Wine stresses that the wine industry already operates within a highly regulated environment and urgently calls for greater policy certainty.

“These proposals could devastate the industry, leading to significant job losses and driving many producers out of the market,” warns Rico Basson, CEO of South Africa Wine. “The wine industry supports over 270,000 jobs, contributes R56bn to the economy, and is a vital force for rural development. Excessive excise rate increases will destabilise this critical sector, harming communities already facing economic hardship.”

Timeline criticism and call for extension

The national treasury plans to announce the new excise framework and proposed adjustments during the Budget Speech in February 2025. However, South Africa Wine has criticised the submission deadline of 13 December 2024, calling it unworkable. The organisation argues that the short timeline does not allow for meaningful consultation or thorough impact assessment.

“We urgently call on the government to extend the submission deadline and reconsider these proposals,” Basson states. “The current excise regime, aligned with international standards, is already achieving public health and revenue objectives without undermining the industry’s sustainability. Rather than penalising compliant producers, the government should prioritise tackling illicit trade and strengthening law enforcement.”

Impact of illicit alcohol trade

South Africa Wine highlights the threat posed by the illicit alcohol trade, which already accounts for over 22% of alcohol consumed in the country. The organisation warns that higher excise rates will exacerbate this issue, posing risks to public health, eroding government revenues, and undermining legitimate businesses.

“Tackling the illicit trade through improved oversight and enforcement would be a far more effective policy strategy,” the organisation asserts.

Lessons from international wine-producing nations

Drawing comparisons with other wine-producing nations, South Africa Wine points out that countries such as France, Italy, and Spain impose minimal to zero excise rates on wine. These policies have enabled their wine industries to thrive, and South Africa should adopt a similar approach to encourage investment and economic growth.

“The wine and tourism strategy holds immense potential for economic development,” the organisation notes. “Encouraging investment by providing policy stability is critical to ensuring the industry’s continued role as a driver of employment, tourism, and economic development.”

A cultural and economic cornerstone

Beyond its economic contributions, the wine industry is a cultural cornerstone of South Africa. South Africa Wine emphasises that protecting the entire value chain—from vineyard workers to exporters—requires balanced policies and certainty.

“The wine industry is more than just an economic contributor; it is a cultural cornerstone of South Africa,” Basson explains. “Protecting the entire value chain requires certainty and balanced policies to ensure the sector continues to thrive, supporting jobs, investment, and tourism.”

Commitment to collaboration and sustainable solutions

South Africa Wine remains committed to engaging constructively with the government to find sustainable solutions that balance public health objectives, fiscal needs, and the wine sector’s sustainability.“We urge the government to collaborate with the industry to find a more balanced approach to alcohol taxation,” says Basson. “Final decisions should be postponed until comprehensive consultations can take place, and any excise increases should be limited to a maximum of the CPI in February 2025.”