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SA’s drinks industry seeks tax relief after new sales ban

Alcohol industry pays an average of R2.5bn a month in excise tax.
Regulation-induced closures could see businesses closing their doors for good. Image: Mike Hutchings, Reuters

South Africa’s alcohol industry, reeling under a renewed liquor sales ban since end December, on Tuesday called for a deferment of excise duty to stave off a wave of business closures and job losses.

President Cyril Ramaphosa extended an existing countrywide ban on alcohol sales on Monday saying it has helped to reduce trauma cases in hospitals and keep staff and facilities available for Covid-19 patients.

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He did not give a definitive date on when the ban would be lifted.

“The South African wine industry faces a grim picture of business closures, job losses, downward price pressure, structural damage to subsectors,” Vinpro, which represents 2 500 local wine producers, said in a joint statement issued by several alcohol associations in South Africa.

The government banned the sale of alcohol for over four months from April last year but later deferred R5 billion in excise taxes for July and August.

The alcohol industry in South Africa pays an average of R2.5 billion per month in excise tax, the statement said, adding that the ban has left the industry in a “precarious” state.

“The industry … faces an enormous financial crisis, and its capacity to make these payments is severely constrained,” said the South African Liquor Brandowners Association, which represents companies such as Distell Group, Diageo plc and Pernod Ricard among others.

The alcohol ban was introduced in December for the second time in nine months as coronavirus infections spiked in the country.

South Africa, which has more than a third of all coronavirus cases in the continent, reported record-high daily new cases last week, with total cumulative infections having topped 1.2 million and more than 33 000 deaths.

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