The South African Government under the guise of protecting consumers from harmful drinking or alcohol related harm through increasing the excise taxes. We all know this is more about government revenue as the government needs to generate more and more due to so much being stolen through corruption.
The annual leakage or theft within the public sector involving tenders has been guesstimated at R27 billion which is not even close to the real figure and these have been sugar coated. Throw in another sugar coated figure of R100 billion lost to the illicit economy and you have a total of R127 billion which could be doubled and you would still not be close to the real figure.
If one considers over the Zuma era with the State Capture that took place an estimated R1.5 trillion was stolen and moved off shore. That is an average of R25 billion per month and no wonder the government has been cash strapped and looking at other creative ways to boost their coffers.
The latest proposal is to increase excise on alcohol by roughly 120% which would see the price rise up to over R3 per can even though we have had the normal budget increases this year which was an additional 3.4% increase. WE all know what the outcome is going to be and this new excise increase proposal is just a way of announcing it without officially announcing it.
Currently the SA Government receives in the region of R45 billion per year with an estimated loss to smuggling and the illicit trade of R16.5 billion per year. One in every 5 beers consumed in SA is a non taxing paying beer and the alcohol market has seen the illicit trade grow by a staggering 55-60% over the last 5 years. This is where the market is heading and these alcoholic drinks are sold anywhere between 35 and 50% cheaper than legal excised alcohol. There is no safety and well being for consumers in fueling the illicit alcohol sales growth and why this is that stupid.
The higher the prices of alcoholic drinks the more the smugglers and those not paying excise make which makes that sector grow even quicker. Just ask the tobacco industry how they are doing with a reported 60-70% of all cigarettes sold being illegal selling well below the excise tax rate itself. This is where the alcohol industry is heading and the idiots themselves proposing these increases are probably involved as why would this be deemed a good idea other wise?
The largest breweries in South Africa with South African Breweries being the largest has been slowly retrenching staff each year. SAB employs in the region of 6000 workers and these employees will be under threat within the next few years if the illicit trade continues to grow at it's current rate. This is a death spiral all down to crime which will see both the tobacco and alcohol industry on their knees.
Like I always say this is an easy fix if you want to fix this and obviously whoever is running the show is corrupt or stupid and is more like a combination of both of these. One would have to be so out of touch with things to even propose such a large excise tax increase and why the reason can only be internal corruption with officials personally involved in the black market.
