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Struggling Alcohol Industry Requests R5bn Deferment From National Treasury

Struggling Alcohol Industry Requests R5bn Deferment From National Treasury

National Treasury has confirmed it’s received a request from the alcohol industry to defer R5 billion in excise duty payments.

The industry has lost billions of rand in revenue due to the ban on alcohol sales and is hoping Treasury will give it a little breathing room.

They’re seeking deferment of R5 billion in excise tax due to the renewed ban under COVID-19 lockdown.

The industry said the total excise due for July is estimated at more than R2.5 billion and for August, the estimated excise would also be around the same figure due to SARS.

More than a week ago, President Cyril Ramaphosa reimposed the ban.

The South African alcohol industry includes the National Liquor Traders Council, South African Liquor Brand Owners Association, the Beer Association of South Africa, Vinpro, and manufacturers.

A Nielsen survey estimates the alcohol industry lost around R20 billion in sales and that was just in the first nine weeks of lockdown. They predict losses running to R10 billion every month the ban remains in place.

That puts a once thriving industry in a severe cash crunch.

South African liquor industry spokesperson Sibani Mngadi explained they had to pay excise tax on all end products, that means the stock that’s in their warehouses that won’t be sold for some time to come.

“The industry and its entire value chain are facing a big financial crisis. Our capacity to pay excise tax is severely constrained.”

The sector has appealed to government to be part of discussions on reasonable and viable alternatives and to give them some relief in the form of a deferral.

National Treasury has confirmed it’s received the industry’s submission, but it can’t comment further as any changes to the tax system can only be announced by the Minister of Finance.