KASHIFA ANCER AND ZIMASA MPEMNYAMA: Treasury taking bold step to curb harm caused by alcohol

The National Treasury has taken a bold step by reviewing SA’s excise tax policies for alcoholic beverages and considering a pricing mechanism that would increase alcohol prices.

The move aims to standardise excise taxes and, most importantly, curb the harm that heavy and binge drinking inflicts on society. Cheap alcohol is known to allow easy access to liquor, worsening binge drinking. 

For decades our alcohol taxation system has failed to reflect the true cost of alcohol harm. High-volume, low-cost alcohol floods our market, fuelling alcohol-related deaths, gender-based violence, road fatalities and an overburdened healthcare system. The consequences are devastating.

The DG Murray Trust’s alcohol harms reduction campaign has submitted clear, evidence-based recommendations urging Treasury to implement minimum unit pricing (MUP) — a pricing instrument that would set a floor price per unit of alcohol, preventing the sale of cheap liquor, which is preferred by the heaviest drinkers.

The MUP is not a tax, but a mechanism to drive up prices, reducing consumption while sustaining Big Liquor’s turnover. Additionally, we have recommended that the Treasury adopt an excise tax structure based on the amount of ethanol contained in a drink instead of the volume of the drink. 

SA is one of the world’s heaviest-drinking nations. Alcohol-related harm costs the country an estimated 10%-12% of GDP annually, far exceeding the economic benefit of the liquor industry.

Industry-aligned researchers dispute this figure, saying that it far overvalues the price of a life. What is indisputable is that heavy drinking costs the country far more in terms of lives lost and women and children damaged than any financial return to the alcohol industry.

Alcohol plays a role in a significant proportion of road fatalities, making SA roads some of the deadliest in the world. It contributes to gender-based violence (GBV) and intimate partner violence cases, trapping women and children in cycles of trauma and abuse. SA has one of the highest reported rates of fetal alcohol spectrum disorder in the world, with up to 28% of children affected in some regions. 

The Treasury has rightly acknowledged that our country’s alcohol taxation system is outdated and ineffective. However, its proposed changes must go further.

Under the current system, a two-litre box of cheap wine can contain more alcohol than spirits but is taxed far less. Ready-to-drink alcoholic beverages — often targeted at young people — are taxed inconsistently, allowing dangerously strong products to remain cheap. Traditional African beer remains taxed on its volume, despite its high alcohol content, and role in harmful drinking. 

While the Treasury’s proposed incremental tax increases are a positive step, they will not be enough to significantly reduce alcohol-related harm unless combined with the MUP — a policy it has yet to commit to.

Powerful tool

The MUP is a simple yet powerful tool that prevents the sale of the cheapest, most harmful alcohol products. Countries like Scotland and Canada have seen immediate reductions in alcohol-related-deaths and hospital admissions of between 9% and 13% after implementing MUP.

Ireland implemented the MUP at €1 per standard drink in 2022, leading to lower alcohol consumption among heavy drinkers. SA cannot afford to ignore a policy with such a proven track record.

Big Liquor and those that benefit from SA's high alcohol consumption patterns will fight these proposed reforms tooth and nail. Like the tobacco industry, they will argue that higher prices and taxes will destroy jobs, ignoring the fact that alcohol-related absenteeism, low productivity and illness already cost businesses billions of rand.

They will claim that these measures will push consumers towards illicit alcohol — a myth debunked in every country that has implemented the MUP.

Big Liquor will also insist that taxation policies punish responsible drinkers — when the MUP primarily affects the cheapest, highest-risk products, not premium brands which moderate drinkers often consume. It is time that the liquor industry acknowledges that, even if we place a far lower value on human life than health economists believe we should, heavy drinking is still not worth the price.   

Industry has suggested that excise taxes and the MUP would punish the poor who pay more for their liquor. But these communities bear the brunt of SA’s deep structural inequalities.

The burden of alcohol-related harm — ranging from liver cirrhosis and pancreatitis, to diabetes and other alcohol use disorders — falls disproportionately on poorer populations, facing a mortality burden from alcohol that is 4.5 times higher than that of the wealthiest communities. Less liquor means a healthier life and better family life — hardly a punishment. 

Economic gains

If the Treasury adopts the MUP, it will help curb excessive alcohol consumption, shifting drinking patterns and reducing binge drinking. The benefits extend beyond public health — lowering harmful drinking will yield social and economic gains for SA. 

While pricing mechanisms are important, they are just a start. The World Health Organisation recommends a broader set of measures, including restricting alcohol advertising, regulating liquor outlet density, strengthening drink-driving laws and expanding treatment and psychosocial support for alcohol use disorders.

SA has not implemented these strategies at scale, leaving a huge policy gap that allows alcohol harm to continue unchecked. The Treasury’s tax review is an opportunity to start closing this gap — but only if it takes bold action. 

• Mpemnyama is project lead, and Ancer campaign manager, for the DG Murray Trust Alcohol Harms Reduction Campaign.