Steep increase in sin tax will challenge wine industry

Minister of Finance, Pravin Gordhan, recently announced an 8,8% increase in excise duties on wine and sparkling wine, and an 8,5% increase on spirits.

Steep increase in sin tax will challenge wine industry
- Advertisement -

The announcement was made during the national budget speech, held recently in the National Assembly.

According to Vinpro, the representative body for South Africa’s wine producers, this increase would be difficult for producers and cellars to absorb.

The increases meant that an excise duty of 23c would be charged for a bottle of unfortified wine, while an excise duty of 26c would be charged for a bottle of fortified wine.

- Advertisement -

Sparkling wine had the biggest increase, with an increase of 70c for a 750ml bottle.

“In a depressed economy, where wine retail price increases are below inflation, wine producers and cellars will find it difficult to absorb these increases,” said Rico Basson, VinPro managing director.

Vinpro said that the wine industry recognised government’s economic challenges, but that only a third of grape producers were currently operating at financially sustainable levels, and that returns on investment had dropped below 2%.

“Investment, policy certainty and direct support with regard to agriculture-related aspects such as housing, water, land, and market access will be critical to take the industry forward,” Basson said.

Jeandré Du Preez is the newest addition to the Farmer’s Weekly team. Originating from a Riversdal farming family, she has farming in her blood. After school she furthered her studies at Stellenbosch and has been working as an agricultural journalist for the past two years. She says she feels privileged to write about an industry paramount to the survival of all South Africans and is inspired by the innovative solutions with which the farming community bridges the many challenges they face. She enjoys being able to combine work with travel and appreciates the modesty and friendliness with which South Africa’s farmers share their accomplishments. She enjoys being able to combine work with travel and appreciates the modesty and friendliness with which South Africa’s farmers share their accomplishments. If she is not writing or visiting farms, you’ll find her relaxing with a good mystery novel or exploring her other passions: travelling and cooking.