Image: Unsplash Research from the South African Medical Research Council and University of Cape Town shows alcohol-related harm costs South Africa between 10% and 12% of GDP annually. These costs are tangible and intangible. They appear in overcrowded trauma units, policing and criminal justice expenses, road traffic injuries, workplace absenteeism, gender-based violence, and long-term developmental impacts such as fetal alcohol spectrum disorders, loss of family breadwinners. Alcohol extracts more from the economy and society than it contributes, creating a persistent drain on public and community resources.
Above-inflation excise increases are among the most effective tools governments can deploy to reduce harm while strengthening revenue. The World Health Organization identifies alcohol taxation as a Best Buy intervention, reducing harmful consumption, protecting young people, preventing violence and injury, and generating sustainable government revenue. Aligning excise increases with evidence allows public health objectives and fiscal strategy to advance together, creating safer communities and stronger economic outcomes.
Illicit Trade Cannot Justify Inaction. The Budget rightly highlighted illicit trade as a challenge. Strong enforcement and regulatory coordination are essential. However, international evidence shows that effective excise policy and enforcement work together, not in opposition. Weakening alcohol taxation in response to illicit trade undermines both public health and revenue potential. Maintaining predictable, above-inflation excise increases alongside enforcement delivers the greatest benefit for communities and the fiscus.
/file/attachments/2988/1800x1800mainimage_196562.jpeg "Drowning in the True Cost: While Budget 2026 relies on inflation-linked excise increases , alcohol-related harm continues to drain 10% to 12% of South Africa's GDP annually.")
Treasury appears to be maintaining a holding position on alcohol excise policy by limiting increases to CPI-linked adjustments. While this preserves the status quo, it falls short of responding to the scale of alcohol-related harm and the strong evidence that excise taxation is one of the most effective tools available to reduce harm and improve population health. The next budget presents a critical opportunity for Treasury to take bolder, evidence-based action that strengthens both the public health and fiscal impact of excise policy.
This should include bringing beer and wine excise rates more in line with spirits based on the tax per litre of absolute alcohol, ensuring a consistent and equitable approach across all beverage categories according to their alcohol content and associated harm. Treasury should also use excise benchmarks strategically to incentivise producers to shift towards lower-alcohol products, including beer at or below 4% alcohol by volume, which would support harm reduction while encouraging reformulation. In addition, following the precedent set in tobacco control, Treasury should implement a comprehensive track-and-trace system to curb illicit alcohol and strengthen oversight of production and distribution. These measures would reposition excise policy from passive inflation adjustments to a proactive tool that reduces harm, improves regulatory control, and protects long-term public revenue.
Government must seize the opportunity to align policy with fiscal sustainability, public health priorities, and economic evidence. A predictable, multi-year, above-inflation excise framework would strengthen the fiscus, reduce long-term healthcare and policing costs, support violence prevention, and allow designation of revenue for prevention and treatment programmes. Aligning alcohol taxation with evidence and economic reality ensures that fiscal, social, and public health objectives work in tandem.
Budget 2026 took important steps to stabilise debt and protect public finances. Yet alcohol-related harm continues to strain healthcare, policing, social services, and productivity, creating avoidable costs. Inflation-level excise increases maintain revenue but do not reduce harm. Aligning excise policy with evidence, fiscal reality and the true cost of alcohol harm is not only a public health necessity but a fiscal imperative. DM