Industry body South Africa Wine has denounced government’s proposed excise tax increases on wine, saying it could contribute to job losses and force producers out of the market.

The proposed tax could see rates rise by up to 80%, which poses a severe threat to the sustainability of the wine sector and its socioeconomic contribution in the country, the organisation reports.

The wine industry supports more than 270 000 jobs, contributes R56-billion a year to the economy and plays a vital role in rural development.

“The proposed excessive increases in excise rates will destabilise this critical sector and harm communities already facing economic hardship,” says South Africa Wine CEO Rico Basson.

Government outlines the proposed excise tax increase in an Alcohol Taxation document, which National Treasury intends to incorporate in a new excise framework during the Budget in February next year.

Having put down a submission deadline for comments of December 13, the industry was only given 30 days to provide its input, which Basson believes is unworkable and fails to provide adequate opportunity for meaningful consultation and impact assessment.

South Africa Wine is calling on government to extend the deadline and reconsider these proposals, motivating that the current excise regime aligns with international standards and achieves public health and revenue goals without compromising the industry’s sustainability.

“Instead of penalising compliant producers, government should focus on combating illicit trade and strengthening law enforcement,” Basson suggests, adding that improved oversight and enforcement would be a more effective policy approach.

The illicit alcohol trade accounts for more than 22% of all alcohol sold in South Africa and will likely increase on the back of high excise rates.

Basson further cites the example of other wine-producing countries such as France, Italy and Spain that have almost zero excise taxes, which encourages investment in these countries’ wine industries.

“We urge the government to work with the wine industry to find a more balanced and sustainable approach to alcohol taxation, postponing any final decisions until after comprehensive consultations, and to limit the wine excise increase to a maximum of consumer price inflation in February 2025,” Basson concludes.