BUSINESS

South African alcohol producers ask for tax relief and alternatives to sales ban

The renewed prohibition of alcohol sales with immediate effect has resulted in the South African alcohol industry having no choice but to apply for a deferment of the payment of over R5 billion in excise duties for July and August 2020.

In a statement on Tuesday (21 July), the South African liquor industry said that the total excise due for July is estimated to be R2.51 billion.

It added that in August, the estimated excise would be R2.58 billion and that total excise payments due to SARS over these two months is R5.1 billion.

South African Liquor Brand owners Association (Salba) spokesperson, Sibani Mngadi, explained that alcohol excise tax is imposed at the point of production.

“This means that our industry has a liability to pay excise tax on end products that are in warehouses, (which) cannot be sold as a result of the prohibition of sales with immediate effect announced last Sunday,” he said.

Mngadi said that the industry and its entire value chain are facing an enormous financial crisis, and its capacity to make these payments is severely constrained.

He said that the sustainability of the sector, now and in the post-Covid-19 era, is dependent on this deferment if job losses are to be avoided.

“The government’s nationwide ban on the sale of alcohol has far-reaching repercussions. A more targeted and nuanced approach is required, and the industry has appealed to the government to enter into discussions on reasonable and viable alternatives,” he said.

“The industry shares with the government its concerns regarding the increase in Covid-19 infections and will continue to support efforts to curb this unprecedented health emergency.

“We reiterate our commitment to partner with the government to create a social compact that drives behavioural change regarding the use and consumption of alcohol.

“We will continue to offer our unanimous support in making our assets available to government in fighting this pandemic together,” he said.

Alternatives

While the liquor industry did not mention specific alternatives, some of government’s top medical advisors have indicated that South Africa could look at changes beyond the alcohol ban.

Presenting in parliament on Wednesday (15 July), the South African Medical Research Council’s (SAMRC’s) Professor Charles Parry said that this could include limiting the availability of alcohol, reducing the drunk driving limit and changes to advertising.

However, he also noted that there are also problems with these proposed restrictions.

“In contrast to a ban on alcohol sales, a combination of strategies is more challenging to implement and likely to have lesser impact, even if used in combination,” he said.

Parry added that these restrictions should have been introduced at the start of level 3, instead of now when there is a shortage of hospital beds.

“Strategically, we did push with the MAC that it might be useful to consider taking such an approach to prevent push-back from the public and the liquor industry and associated businesses.

“It might also make it easier to defend legal challenges because then the government could say they initiated less intrusive strategies first.”

Some of the alternatives put forward include:

  • Limit availability of alcohol by reducing hours it’s able to be sold;
  • Increasing the legal drinking age to 19;
  • Not allowing delivery of alcohol by third-party services;
  • Reducing the legal blood alcohol limits to 0.02g/100ml;
  • Increase prices via tax;
  • Reduce advertising avenues and only allow factual information in ads;
  • Ban the sale of alcohol in containers or units that encourage heavy drinking (like 1 litre bottles);
  • Intensify counselling and medically assisted treatment for those struggling with dependence.

Read: South Africa could introduce these new drinking laws to combat alcohol abuse

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