Yes, sin taxes are going up again

2018-02-21 14:11 - Jan Cronje
(iStock)

Cape Town - As expected, South Africans will be paying more for tobacco and alcohol. 

Finance Minister Malusi Gigaba announced excise duties will increase by between 6% and 10%. 

This is expected to bring in an additional R1.33bn in revenue in the 2018/19 financial year. 

The sin tax increase was announced on Wednesday as part of tax policy proposals in Gigaba’s maiden budget, which is expected to raise R36bn in additional tax revenue for the 2018/2019 financial year.

Excise duties on an average 340ml can of beer, cider or alcoholic fruit beverage will increase by 10%, from 146.9 cents to 161.5c. Duties on tradition African beer remain unchanged at 7.82c per litre. 

Wine drinkers be paying 30c more per litre, with duties increasing from R3.61 to R3.91/litre. 

The tax on spirits will increase to R190.08/litre of absolute alcohol, up from R175.19 currently. This corresponds to about R61.30 in excise duties per 750ml bottle. 

Smokers will be paying R15.52 in tax per box of 20 cigarettes, an 8.5% increase form the current rate of R14.30 per pack. 

Excise duties on cigarette tobacco will increase from R16.07 per 50 grams to R17.44, while cigars will be taxed at R82.31 per 23 grams, an increase of 8.5%. 

The hike in sin taxes was widely expected by economists, with Sanisha Packirisamy and Herman van Papendorp from Momentum Investments giving them a very high probability of being passed. 

“Excise taxes on alcohol and tobacco are likely to continue increasing at an above inflation rate, as has been the case since 2002,” noted Investec. 

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER