South African alcohol producers are pressing the National Treasury to adopt a more nuanced approach to liquor taxation, arguing that current proposals could destabilize prices and inadvertently boost illicit trade.
During virtual engagements with government officials, industry representatives advocated for a methodology that ensures price stability while still generating revenue and discouraging excessive consumption.
The core of the industry’s argument is that poorly structured tax increases often fail to reach their intended fiscal targets.
Instead, they can create price distortions that benefit organized crime networks, which operate outside the tax net.
This dynamic has been observed in other jurisdictions, including Germany, where customs officials have warned that proposed excise hikes on alcohol and tobacco could subsidize illegal operations rather than fund public services.
Similar patterns have emerged in India, where state governments have reported sharp increases in liquor excise revenues, yet concerns persist about the long-term sustainability of such models if they drive consumers toward unregulated sources.