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Required reading for those in the alcoholic beverage industry

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Treasury has on Monday published for public comment a discussion paper regarding the taxation of alcoholic beverages in the country.

The paper, entitled ‘Review of the Taxation of Alcoholic Beverages in South Africa’, follows the 2010 and 2012 budget announcements.

According to National Treasury, this discussion document analyses the current excise duty structure for alcoholic beverages since its implementation in 2002, recent developments in excise policy formulation both locally and internationally, and the scope of using the excise duty system to internalise the social external costs arising from alcohol abuse.

Concerns with the current  alcoholic beverage tax regime include the need to update the current benchmarks; anomalies in the ready-to-drink, cider, and alcoholic fruit beverages beverage market; structural changes in  alcoholic beverages market; the appropriate classification and taxation of mixed and fermented alcoholic beverages and the displacement of some lower priced products into the illegal sector.

Treasury said the proposals contained in the discussion paper should be seen as part of a package of measures aimed at encouraging a more responsible use of alcohol.

Other measures include excise duties on alcoholic beverages, limits on the drinking age, restrictions on liquor trading hours, restrictions on alcohol advertising, education targeted at the youth and other groups at risk (e.g. pregnant women), better enforcement of laws and regulations to combat alcohol abuse and illicit trade, and higher penalties for drinking and driving.

Among the key aspects raised in the discussion document for consideration, in the reform of the excise tax regime for alcoholic beverages, are:

  • The recognition of the social costs of alcohol abuse and the need to include such costs in the price of alcohol;
  • The need to keep track of international benchmarks;
  • Whether the current approach to target the total consumption tax burdens of wine, clear beer and spirits should be reviewed;
  • Whether a uniform tax based on alcohol content rather than by product type (e.g. wine, beer, spirits, etc.) should be considered;
  • Dealing with anomalies in the cider, alcoholic fruit beverage, and spirits cooler market (sometimes collectively referred to as the ready-to-drink market);
  • The appropriate classification and taxation of mixed and fermented alcoholic beverages;
  • Taking account of changes in the structure of the alcoholic beverage market;
  • Technological advances in production techniques and product development; and
  • The displacement of some lower priced products

Copies of the discussion paper are available on the National Treasury website: www.treasury.gov.za.

Written comments should be submitted to Riaan Labuschagne at Riaan.Labuschagne@treasury.gov.za by the close of business on 30 June 2014. – SAnews.gov.za

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Alan Straton

Chief Cook, Bottle Washer and Broom Mechanic at MyPE
Passionate about Port Elizabeth and definitely NOT packing for Perth. Alan's ethos is epitomised in the words of Nelson Mandela; "I have fought against white domination and I have fought against black domination. I have cherished the idea of a democratic and free society. If need be, it is an ideal for which I am prepared to die." See more articles by Alan.