In his budget speech, Finance Minister Enoch Godongwana has announced an increase in taxes on cigarettes and alcohol.
Godongwana said the government will raise taxes on cigarettes and alcohol in 2023 but there is a relief for sugary drinks consumers.
The minister delivered his address on Wednesday saying that no major tax developments were being announced for 2023, at least on the budget’s revenue side.
Godongwana said this was because revenue collection for 2022/2024 is expected to reach R1.69 trillion – exceeding the 2022 budget by an estimated R93.7 billion.
However – while this means that tax brackets can be adjusted along with inflation and fuel levies can remain unadjusted for 2023 – it does not mean that so-called “sin taxes” will see the same benefit.
The government is proposing an increase in the excise duties on alcohol and tobacco of 4.9%, in line with expected inflation.
According to BusinessTech, the tax increases come as a blow to the tobacco and alcohol industries, which have been asking the government and National Treasury for a reprieve given the state of affairs over the last three years.
Both industries were hit hard by the ravaging Covid-19 lockdowns which brought with it bans on the sale of tobacco and alcohol products.
Godongwana said that something is being done about the situation and that SARS has curbed illegal cigarettes.
“On illicit trade, over the past three years, SARS has taken several steps to enhance its effectiveness in combating illicit trade, particularly in tobacco,” he said.
“To this end, SARS has completed 2 316 seizures of cigarettes & tobacco products to the value of R598.8 million. An additional R18 billion worth of schedules and assessments have been raised, targeting syndicated tobacco-related crimes.”
Furthermore, the minister noted that the tax authority managed to collect more than R1.2 billion in revenue and handed over 92 cases for criminal proceedings with the National Prosecuting Authority of which two resulted in successful convictions relating to tobacco smuggling syndicates.
One ‘sin tax’ that will get some reprieve is the country’s sugar tax, or the health promotion levy, as it is officially known.
“Due to the difficult operating environment for the sugar industry from the impact of flooding and social unrest, the health promotion levy will remain unchanged for the following two fiscal years, to enable the industry to diversify or restructure,” the minister said.
Tax increases on cigarettes and alcoholic drinks:
- A 340 millilitre can of beer increases by 10 cents;
- A 750 millilitre bottle of wine goes up by 18 cents;
- A 750 millilitre bottle of spirits will increase by R3.90;
- A 23 gram cigar by R5.47;
- And on a pack of 20 cigarettes, the duty rises by 98 cents.
