Beer Association fears sin tax, VAT hike will drive illicit alcohol trade

CAPE TOWN - The Beer Association fears that raising sin taxes dramatically, along with a VAT increase, could drive the illicit alcohol trade.

The taxation of alcoholic beverages and tobacco is usually significant and as government tries to raise revenue to cover a shortfall, this year could be no different.

Beer Association CEO, Charlene Louw: "I think we've seen economists already project what the inflation outlook is; it's sitting within a range of about 3.2%, and what they are proposing, particularly for the alcohol industry, is far in excess of even where the projections are around inflation."

Louw explains the industry's concern: "Our concern broadly is actually the fact that consumers are really strained in South Africa and we've seen growing increases in the amount of illicit alcohol trade and so with an already stretched consumer, this is an indutsry that is being enabled, inadvertently, by government with these very high tax hikes."