SAB Calls on National Treasury to Link Alcohol Excise Tax Increases to Inflation

• South African Breweries urged the National Treasury to adopt an inflation-linked alcohol excise framework at a recent stakeholder consultation
• SAB warned that repeated above-inflation tax increases could fuel the illicit alcohol trade and hurt thousands of jobs across the beer value chain
• South Africa's inflation has climbed to 4.5%, meaning any inflation-linked increase in 2027 could still exceed the 3.4% hike seen in 2026

South African Breweries has called on the National Treasury to overhaul how alcohol excise taxes are calculated, urging a shift to a framework that ties annual increases to inflation. The call came during a recent stakeholder consultation held by the Treasury on the future of South Africa's alcohol excise policy.

According to Business Tech, Excise duties on alcohol have long been an attractive revenue tool for government. With the social and health costs of drinking well documented, raising so-called sin taxes is a relatively easy sell politically. In this year's budget, the Treasury raised alcohol excise taxes by 3.4%, a softer increase compared to the 6.75% applied the year before. But SAB argues that even moderate above-inflation hikes cause real harm over time.

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What SAB is asking for

The brewer, whose portfolio includes Castle Lager, Carling Black Label and Hansa Pilsener, says an inflation-linked model would protect the real value of government revenue while giving businesses and consumers the predictability they need to plan ahead.

Zoleka Lisa, Vice President of Corporate Affairs at SAB, said a stable policy environment is essential for growth. SAB also pointed to international precedent, noting that several markets have already adopted inflation-linked excise adjustment mechanisms.

Jobs and the illicit market at risk

SAB's submission raised concerns beyond the boardroom. The brewer argued that persistent above-inflation increases squeeze consumers, reduce spending power and ripple through the wider supply chain, affecting farmers, retailers, suppliers and hospitality businesses.

It also flagged the growing gap between legal and illicit alcohol prices, warning that steep tax hikes push consumers toward unregulated products. That shift, SAB argued, ultimately undermines tax compliance and erodes the very government revenue such increases are meant to protect. Lisa added that a predictable framework would support consumers, businesses and government alike.

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What consumers can still expect

Whether or not the Treasury adopts the proposal, drinkers should not expect relief. South Africa's inflation has risen from around 3% at the start of the year to 4.5%, partly driven by fuel prices. Even if the 2027 budget mirrors that rate, the increase would likely land higher than what was applied in 2026, meaning alcohol prices are set to keep climbing regardless of the framework chosen.

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Source: Briefly News