Although steps are being taken to curtail illegal liquoe exports and imports, wine producesr are still faced with the problem of excessive excise duties, writes Lynda Loxton
HEAVILY taxed at home, South Africa’s wine producers are increasingly concerned about illegal imports and exports of spirits, which could be costing the country about R9- billion a year in lost revenue, according to some estimates.
Stellenbosch Farmers Winery (SFW) chairman Jeff Malherbe said in his annual report this week that this amount was more than “three times the country’s current budget for the Reconstruction and Development Programme.
“Business looks to the government to create a stable environment with clear regulating policies within which sustainable economic development can take place. It is, therefore, gratifying to note the steps taken by business and the government to curtail this illegal action.”
He was referring to the new Customs Law Enforcement Group Caucus, set up over the past year by business and the government. But he was less happy about developments on excise duty and import tariffs.
He said the liquor industry had always made “a substantial contribution” to the fiscus through company taxes and excise duty, but was this year once again hit by “excessive” excise duty increases for wines and alcoholic fruit beverages.
In his annual report, Distillers chairman Boet van Zyl said that of the cash value added by his group, 45% was used to pay excise duties.
“High levels of excise duties are detrimental to all interest groups and increases … should be limited to below the increase in the producer price index to avoid upward pressure on inflation,” he said.
SFW imports whisky and Malherbe said he was concerned about the delay in finalising import tariffs in terms of obligations under the World Trade Organisation. This was creating uncertainty, which affected long- term planning.
On the free trade agreement being negotiated with the European Union, Malherbe said that while SFW supported the principles of international free trade, “the agreement should be carefully negotiated in order to avoid unnecessary disruption of the local industry and resultant job losses”.
Van Zyl said the import tariffs on wine and spirits should be set in such a way “to prevent the dumping of subsidised foreign products in the South African market, without disrupting the market for normally priced imported products”.
SFW said its export sales had grown by 38% in volume over the last year and were expected to show continued growth. “In order to meet this expected increase, SFW will assess the potential of joint ventures with international partners,” SFW managing director Frans Stroebel said.
He said SFW was now exporting to 50 countries, with Germany the largest market. Exports to Africa had grown “significantly”, mainly to Kenya and Zimbabwe.
Distillers’ managing director Jan Scannell said exports had risen 22% in volume and 46% in value to R84-million in the past year and this was expected to be maintained in the coming year.
To meet overall increased demand, Distillers had approved projects worth R47-million in the coming year, mainly to improve efficiency and quality assurance.