South Africans are renowned to be heavy binge drinkers. Even though the
2
2. Increase the price of alcohol.
Increase the price of alcohol
majority of South Africans do not drink at all, those who do drink consume large volumes of alcohol, which is particularly cheap in South Africa.
Excise taxes Increasing the retail price of alcohol is one of the most effective ways to reduce alcohol consumption. Governments typically use excise taxes to do this. Also known as ‘sin taxes’, these tax increases are passed on to consumers almost immediately in the form of higher prices. The current levels of excise taxes are less than they were 60 years ago, in real terms. However, the democratic government must be commended as year-on-year increases in excise taxes since 1994 have been consistently and significantly higher than inflation. This was not the case, pre-democracy when increases in excise taxes for liquor were below inflation.
Volume-based discounts Manufacturers respond to the price increases from taxes by discounting alcohol bought in larger volumes. For example, it is cheaper to buy a six-pack of beer than to buy six beers individually. It is also cheaper to buy beer in larger containers. For example, beer in a 750ml bottle works out cheaper than a beer in a 340ml bottle. In this way, manufacturers use the pricing mechanism to encourage higher consumption. After all, alcohol is addictive and the more you can get people to drink excessively, the more dependent they become.
40
41
