Will liquor laws stifle economy?

MONDAY is the deadline for comment submissions on proposed amendments to the Liquor Act 59 of 2003. The amendments, proposed by the Department of Trade and Industry, are well-intentioned, but need to be more balanced to preserve an industry vital to the economy.

The changes are designed primarily to bring unregulated liquor trade under control, curb the growing socio-economic effects of alcohol abuse, uphold empowerment requirements and build capacity for enforcing compliance.

It proposes excise duties be increased. Many consumers are price sensitive so by making liquor more expensive, the government hopes to dissuade excessive consumption.

However, alcoholics and alcohol abusers are not as price sensitive and will always find a way to obtain liquor. They’ll either sacrifice essentials or deal through the black market.

Education and access to intervention is what’s needed. The National Treasury discussion document issued in May 2014 says: “Social problems arising from excessive alcohol consumption might be exacerbated if sharp increases in excise duty result in some drinkers turning to unsafe illicit products.

“Alcohol tax increases may also give rise to unintended shifts in consumer behaviour… that could undermine government’s health objectives. The effectiveness of alcohol tax policy depends on the extent to which alcohol taxation discourages excessive alcohol consumption and its impact on the economy and illicit trade.”

Let’s not forget that this bustling industry is a significant player in the country’s economy. According to the National Treasury report, the liquor sector contributed an estimated R73 billion for fiscal year 2009/2010, or 2.9 percent of South Africa’s GDP.

The same report indicates it sustains an estimated 522 000 employment opportunities. It’s true numerous reports have shown a correlation between drinking and violent crime, traffic crashes, domestic violence and other social problems. But to what degree these are mitigated by reducing alcohol consumption and which communities benefit from across-the-board restrictions varies from study to study.

By no means is the suggestion being made that social instability or the loss of life be ignored in favour of revenues. But is clamping down on an industry that does far more good the best way to address the problem?

Surely a better solution is to bolster programmes that educate the public on good drinking habits and the dangers of abuse, and offer support to those in need of rehabilitation. Such programmes should target the abuser’s reasons for drinking excessively rather than the act itself.

Of greater merit are the amendments designed to bring under control the illicit production and distribution of liquor.

People from other fields will be designated as inspectors acting on behalf of the National Liquor Regulator. These include police officers, traffic officers, health and safety inspectors, medical inspectors and others. Although they’ll need training as prescribed by the Minister, they’re in a prime position to carry out checks during the course of their duties. In this way, the law hopes to build the required capacity for enforcement.

With these resources, unlicensed outlets can be identified and brought to book. Such businesses not only fuel abuse by selling to already drunk or under age customers for the sake of profit, but also contribute nothing in the way of excise. The proposed amendments would see greater requirements on suppliers to ensure they are selling to licensed traders or they will be held equally accountable for claims resulting from liquorrelated incidents.

The proposed amendments also suggest an increase of the legal drinking age from 18 to 21. We regard a person on his 18th birthday as an adult that can drive a vehicle, vote, enter into contracts, get married and even get a firearm license, but this would mean such a teenager can’t purchase or consume alcohol.

This proposal is unlikely to succeed, and if it did, is more likely to force 18- to 21-year-olds to seek alcohol in illegal manners.

The intention of the law is good, but overall it puts a vital economic contributor in danger as well as endangering the jobs of workers who depend on this industry.

The DTI should closely monitor the efficacy of this new legislation, and adapt their approach to solve the very real problems while considering the knock-on effect on national concerns.