South Africa: Additional 5% or 10% levy on alcohol seen as inevitable - PricewaterhouseCoopers

An additional 5% or 10% levy on alcohol is inevitable and could be included in this year’s budget, Fin24 reported on February, 16.

Gerard Soverall, head of indirect taxation at PricewaterhouseCoopers (PwC) said companies like SABMiller were very concerned about the impact of this levy on their operations.

South Africa’s Finance Minister Pravin Gordhan is to make the budget speech next week, it is reported.

PwC’s head of taxation, Paul de Chalain, said the question was whether the possible alcohol levy was aimed at combating alcohol abuse or generating revenue.

There were far more effective ways to combat alcohol abuse than through tax, he added.

Two years ago Botswana had introduced such a levy of 30%, causing somewhat of an uproar.

Soverall said taxpayers reach a point at which they simply refuse to pay more tax, which is when they rebel.

He declined to say how far he thought South African taxpayers were from this point.

The basic principles of taxation, he said, were that it should be fair, that is could be collected cost-effectively and that it should be at a level that people were prepared to pay.

18 February, 2011