South Africa’s Finance Minister, Parvin Gordhan has positioned sin taxes in such manner that would limit the drinking and smoking abilities of South Africans.
While the Minister was tabling his Budget Speech in the National Assembly today, he announced that alcohol and tobacco excise duty rates will increase by between 6.1 and 9.5 percent this year.
“(The National Treasury proposes) increases in the excise duties for alcohol and tobacco of between 6 and 10 percent,” said the Minister.
Also, BuzzSouthAfrica gathered from the National Treasury’s Budget Review document that the targeted excise tax burdens for wine, beer and spirits are respectively, 11 23 and 36 percent of the weighted average retail price.
According to the Treasury, tax rates on most alcoholic drinks have consistently increased above inflation annually since the implementation of the current excise regime in 2002.
Adding that the 2017 Budget will continue with the increasing trend, the National Treasury said:
“This will lead to excise tax burdens that are slightly higher than the targets for beer and spirits.
The targeted excise tax burden, as a percentage of the retail selling price of the most popular brand within each tobacco product category, is currently 40%.”
More so, it was identified that the consumption of cigars has moved towards more expensive brands, requiring a higher than inflationary increase to maintain the targeted tax burden.
As such a proposal to increase the excise duty rate by between 8 and 9.5 percent was tabled.
The Implication Of The Increase In Sin Taxes
Reporting the increase in sin taxes, the South African Government News Agency explained that the new proposal the Finance Minister tabled, implies that an excise duty of 149.6 cents will now be charged on every 340ml can of malt beer.
Likewise, an excise duty of R3.61 per litre will be charged on unfortified wines. That represents an increase of 8.8 percent on the current charge of R3.31 per litre.
Similarly, a new rate of R6.17 per litre for fortified wines was proposed. The rate has a 6.1 percent increase as the current charge is R5.82 per litre.
Again, the excise duty for sparkling wine will go up by 8.8 percent from R10.53 to R11.46 per litre.
That’s not all, there was a proposal for an increase of 8.5 percent on spirit products. That would raise the excise duty to R175.19 per litre of absolute alcohol, or R56.50 per 750ml bottle.
For cigarettes, a charge of R14.30 will be imposed on a box of 20. That means an increase of 8 percent from the current R13.24 per 20 cigarettes.
More so, cigarette tobacco products will experience similar increase, from R14.88 per 50g to R16.07 per 50g. Same goes for pipe tobacco and cigar products which have bagged a 9.5 percent excise duty.