Finance Minister Pravin Gordhan has announced an increase in sin taxes for consumers of alcohol and tobacco.
Tabling his Budget Speech in the National Assembly on Wednesday, he said alcohol and tobacco excise duty rates will increase by between 6.1 and 9.5% this year.
This is likely to leave a bitter taste in the mouths of alcohol drinkers and smokers, with increases likely to be passed on to consumers.
“[National Treasury proposes] increases in the excise duties for alcohol and tobacco of between 6 and 10%,” Minister Gordhan said.
According to National Treasury’s Budget Review document, the targeted excise tax burdens for wine, beer and spirits are 11%, 23% and 36% of the weighted average retail price respectively.
National Treasury said since the implementation of the current excise regime in 2002, tax rates on most alcoholic beverages have consistently increased above inflation annually. The 2017 Budget continues this trend.
“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%,” National Treasury said.
National Treasury said the consumption of cigars has moved towards more expensive brands, requiring a higher than inflationary increase to maintain the targeted tax burden.
“Government proposes to increase the excise duty rate by between 8 and 9.5%.”
What increase in sin taxes means for consumers
The new proposal means that an excise duty of 149.6 cents will be charged on every 340ml can of malt beer compared to the current 135c, which translates to a 9% increase.
A similar tax will apply to ciders and alcoholic fruit beverages.
National Treasury proposes an excise duty of R3.61 per litre on unfortified wines, an increase of 8.8% on the current charge of R3.31 per litre.
For fortified wines, the new rate being proposed is R6.17 per litre compared to R5.82 per litre, an increase of 6.1%.
Excise duty for sparkling wine will go up by 8.8% – from R10.53 to R11.46 per litre.
National Treasury proposes an increase of 8.5% on spirit products – raising the excise duty to R175.19 per litre of absolute alcohol, or R56.50 per 750ml bottle.
A charge of R14.30 will be imposed on a box of 20 cigarettes, an increase of 8% from the current R13.24 per 20 cigarettes.
Cigarette tobacco products will be hit by the same increase, from R14.88 per 50g to R16.07 per 50g.
A 9.5% excise duty will be charged on pipe tobacco and cigar products.