Sin taxes won't force higher SAB hike

Johannesburg - There is good news for those who like a tipple - brewing company SAB has decided to keep its own average price increase in line with inflation at 4.5%, despite the government's announcement of a 7.5% increase in excise on beer being higher than the projected inflation rate for 2011.

As a result, weighted average beer prices for consumers would increase 6.5%, with the remaining 2% being the net effect of the excise change, SAB said.

"SAB's increase is in line with the company's efforts to keep consumer prices affordable and within inflationary levels. The increase takes effect from today, February 23," it said.

SAB added it was committed to continue engaging with the government on the development of a fair and efficient excise tax regime. This is in line with an announcement made by the government last year to normalise excise rates within the liquor industry and bring them in line with international benchmarks.

SA's excise on beer is ahead of the international average. The beer industry currently pays excise and VAT as a percentage of the selling price of beer at more than 33%, while independent research in 38 countries shows the international average to be only 29%.

In SA, the excise and VAT burden on beer, which has the lowest alcohol content of all liquor products, was out of line with the international trend towards higher excise rates for liquor products with higher alcohol levels, SAB said.

Earlier, Finance Minister Pravin Gordhan retained the same formula for increasing excises on consumers' favourite alcoholic beverages. For this year, the percentages remain in line with the taxation formula that has been maintained for several years - 23% on wine, 33% on malt beer, 43% on spirits and 52% on tobacco products.

This year sees excise duties on sparkling wine rise by 4.5% to R6.97/litre, unfortified wine by 8.4% to R2.32 /litre, fortified wine by 7.4% to R4.33/litre, malt beer by 7.5% to R53.97/litre of absolute alcohol (not per litre of beer), alcoholic fruit beverages by 7.5% to R2.70/litre and spirits by 10% to R93.03/litre of absolute alcohol.

Excise on cigarettes rises 8.9% to R9.74 per packet of 20, cigarette tobacco by 8.2% to R10.53/50 grams, pipe tobacco by 10.3% to R2.98/25g, and cigars by only 6% to R50.5/23g.

As was the case last year - and in previous years - traditional beer again managed to escape the excise tax net.

A packet of 20 cigarettes will cost 80 cents more; a litre bottle of sparkling wine will cost 30cs more; a 340ml can/bottle of beer will cost 1c more; and a 750ml bottle of spirits will cost R2.73 more.

However, there could be a reason for drowning sorrows next year as a discussion document will be published for public comment in July - probably the harbinger of heavier excise duties to come, following a hint in last year's budget that the excise duty structure would be reviewed.