Dop tax set to hit R100 threshold in Budget

Government excise tax on spirits is poised to exceed the R100 per 750ml bottle level if Finance Minister Enoch Godongwana applies the customary above-inflation increase in duties during Wednesday’s Budget Speech.

In the May 2025 Budget, National Treasury raised excise duties on alcoholic beverages by 6.75 percent, continuing a pattern of annual increases that have steadily lifted the tax burden on drinkers. 

The adjustment, which took effect from 1 April, added to the cost of beer, wine and spirits, while traditional African beer was left unchanged.

For spirits producers, the trajectory of increases has become a focal point ahead of the 2026 Budget.

750ml remains the dominant unit size across all major spirits subcategories, including brandy, gin, vodka, whisky and rum.

Booze distributor, Diageo South Africa, said the tax hike will see consumers sukkel.

Corporate relations director Sibani Mngadi explained: “At R100 per bottle, government tax becomes the biggest component of the cost to the consumer, ranging between 55 percent to 65 percent of the retail selling price of mainstream spirits products. We believe there is no room for consumers to absorb further increases in the statutory component of the price.

Excise duties on spirits have nearly doubled over the past decade. Industry data shows the tax burden rising from roughly R52 per bottle in 2016 to a projected level above R100 should another increase be implemented.

The company warned that sustained tax hikes are contributing to the expansion of the illicit alcohol trade.

Meanwhile, the Democratic Alliance (DA) says South Africans are “deeply overtaxed” and has warned that Budget 2026 must not introduce any new tax increases, calling instead for inflation-linked tax bracket adjustments and a shift towards tax relief.

DA finance spokesperson Mark Burke said the party expects National Treasury to avoid raising personal income tax, corporate tax or VAT when Finance Minister Enoch Godongwana tables the national budget.

Burke said: “Budget 2026 must see adjustments in tax brackets and rebates in line with inflation.

“We can’t afford another year of stealth taxes, and we definitely can’t afford explicit increases.”

On tax policy, the DA also called for reforms aimed at supporting small businesses and encouraging savings.