Every February brings with it a familiar ritual: the country collectively leans in for budget season – when public policy becomes part of pop culture, and when even the most spreadsheet-averse among us start debating excise, deficits and debt-to-GDP ratios. 

And of course, there’s the pageantry around the budget speech itself. Along with all the visuals of Minister Enoch Godogwana wearing his usual stylish fedora. We’ve almost come to associate the fedora with the fiscus.  

But do you know the history of the fedora hat? 

In the 1920s and early 1930s – the height of Prohibition in the United States – the fedora was popularised and became the official headgear of both jazz-age illegal drinkers and the bootleggers who kept them supplied. It was the era when lawmakers tried to legislate alcohol out of society, only to cause a financial and criminal catastrophe instead. Far from reducing drinking, Prohibition empowered organised crime and cost the US government billions in lost revenue. 

When Minister Godongwana steps up to deliver the 2026 Budget Speech today, many South African businesses will be waiting on tenterhooks, especially those who are impacted by the government’s increasingly excessive approach to “sin taxes”. 

Take, for instance, the alcohol sector. As was recently highlighted in the news, the excise on a bottle of spirits stood at R52 in 2016. By tomorrow it will most likely be over a R100. This near doubling is something that no consumer-facing sector can absorb. It has pushed legal price points upward at a pace that consumers – already carrying rising costs in food, transport and electricity – cannot keep matching. And that pressure has created an enormous vacuum for illicit operators to fill. In South Africa right now, there are criminal bootleggers a plenty, fedoraed or otherwise. 

When counterfeiters and smugglers can offer “products” (sometimes toxic) at less than half the legitimate retail price, the consequences are predictable. According to a 2025 Euromonitor study, the state forfeits at least R18 billion in tax revenue every year because of illicit alcohol. And far from addressing a alcohol related harm, the policy seems to be exasperating harm: A recent study found that one in three South Africans knows somebody who has died from poisonous illegal alcohol. That is a shocking figure. 

Excessive excise does not curb alcohol demand, it simply shifts that demand into unsafe, unregulated and criminal channels. High taxes have not shrunk consumption. They have shrunk the formal market. The fiscus is being robbed of money that could have been spent on much needed services. 

The alcohol or tobacco industries are not asking for a free ride or special treatment. They are asking for sensible policy at a moment when the data shows that the current approach is not working. South Africa’s own forms of “Prohibition” are unsustainable – a lesson we probably should have learnt when the experiment with alcohol and cigarette bans backfired so spectacularly during the Covid pandemic. 

So nobody can blame business leaders in these sectors if, to them, the Godongwana fedora starts to look more like a symbol of bootlegging than of budgeting.  

If government truly wants to stem the illicit tide, protect jobs, remove toxic products off the streets, and bring revenue back into the formal economy, then the most immediate, practical step is simple: resist the urge to impose another round of punishing excise increases.

– Loftus Marais
Chief Operating Officer