In a country facing a cost-of-living crisis and sluggish growth, certainty has become essential. Unemployment remains among the world’s highest, and families struggle to plan ahead.
For businesses, investors and workers, knowing what tomorrow brings matters more than any single policy choice. Yet for more than a decade, South Africa’s alcohol excise system created the opposite outcome. It delivered unpredictability, volatility and unintended consequences. As a result, many stakeholders now recognise that certainty is the new relief.
The National Treasury’s current review of alcohol taxation offers an opportunity to reset the system. This moment allows policymakers to place certainty at the centre of excise design. It also encourages a shift away from year-to-year discretion. Instead, the government can legislate a framework that ties adjustments to inflation. This approach can restore trust, strengthen revenue and stabilise the market for consumers. In an environment where certainty is the new relief, this shift is overdue.
How unpredictability became the problem
The problem begins with how the excise policy evolved. South Africa originally designed excise to rise with inflation. That principle should have maintained real value over time. In practice, policymakers ignored it repeatedly.
Between 2012 and 2024, excise on beer rose 114%. Inflation increased by only 75% over the same period. Wages grew even less. This divergence pushed the tax burden above the Treasury’s own targets.
The government set beer’s excise burden at 23% of the weighted average retail price. By 2023/24, the burden climbed to 25.8%. Adding VAT raised it to 37.8%, which exceeded the 35% benchmark. This trend matters because unpredictability drives instability. Brewers plan investments many years ahead. When they cannot predict tax changes, they delay expansion and postpone supplier contracts.
Farmers growing barley and maize then face uncertainty about whether buyers will commit to future harvests. Tavern owners, many of them women entrepreneurs, also feel the pressure. They cannot predict whether customers will afford legal beer or switch to cheaper illicit options.
Unpredictability hurts the consumer
Unpredictable excise hikes hurt consumers and the state as well. First, they reduce affordability. Beer prices increased 22% in five years, driven by excise pass-through and higher production inputs. Households facing rising electricity, fuel and food prices then struggle even more.
Second, government revenue suffers. Treasury reports show diminishing real growth in beer excise receipts. Nominal collections rose 9% annually between 2012 and 2023. Real growth reached only 1.7%. When excise rises too fast, legal sales decline. Consumers also shift to untaxed illicit products. Either way, the government collects less than expected.
Third, harmful behaviour increases. When legal alcohol costs far more than illicit alternatives, people drift into unsafe markets. These markets offer unregulated products that sometimes contain toxic substances. This movement exposes consumers to serious risk and further erodes the tax base.
In short, unpredictability hurts the consumer, taxpayer, treasury and industry. A system that lacks stability cannot support growth, sustainability or responsible consumption. Policymakers now see that certainty is the new relief.
Why certainty works – lessons from global best practice
There is a better path. It is straightforward and internationally tested: link excise increases to expected inflation with tight controls on discretion.
Canada adjusts beer excise once a year through automatic inflation updates. When inflation spiked, Canada capped increases to offer predictability. Australia adjusts excise twice a year in line with CPI. This ensures steady but manageable increases. The UK often freezes or reduces beer duties to protect pubs and jobs. Tanzania has also frozen duties in some years to support local producers. Each example shows that predictability strengthens compliance and investment.
South Africa, meanwhile, relied on discretionary hikes that consistently exceeded inflation. The lessons abroad show that certainty encourages investment and supports long-term industry health. They also demonstrate that certainty is the new relief for businesses navigating unpredictable environments.
The need for certainty becomes even clearer within South Africa’s broader economic landscape. The economy grew an average of just 0.8% a year since 2012. Unemployment sits above 30%. Consumer incomes remain stagnant. At the same time, production costs soared: electricity rose 90%, fuel 44%, barley 36% and aluminium 35% since 2019.
Piling above-inflation excise hikes onto these pressures damages one of the country’s most valuable industries. The beer value chain contributes R95.8 billion to GDP, supports 210,000 jobs and pays R71.8 billion in taxes each year. It props up agriculture, manufacturing, logistics, retail and services. Excise policy should protect this contribution rather than weaken it.
A legislative path to stability
To fix the system, South Africa needs more than promises. It needs legislation that anchors excise adjustments firmly to inflation. This framework would protect revenue stability by smoothing year-to-year collections. It would enable companies to plan investments, factory upgrades, and supplier contracts. It would shield consumers from sudden price spikes that drive them toward illicit alternatives. It would also rebuild trust between industry and government.
The law should allow limited discretion, perhaps 1% above inflation, but only in exceptional circumstances. This preserves flexibility without undermining predictability. Policymakers must recognise that revenue goals and industry stability can align. Inflation-linked excise delivers both outcomes. It keeps taxes in line with economic conditions. It also removes uncertainty, which slows investment. In this context, certainty is the new relief because it unlocks benefits across the value chain.
South Africa now stands at a critical decision point. One path leads to unpredictable hikes, a shrinking legal market, rising illicit trade and fading revenue. The other path offers a stable, legislated framework that supports the fiscus, the industry and consumers.
At a time when uncertainty affects daily life, from power supply to transport logistics, excise policy represents one area where predictability is achievable. This reform promises outsized benefits. It signals clarity, strengthens planning and creates confidence. Ultimately, certainty is the new relief and the country needs it embedded in law for the sake of its economy, its workers and its future.
