CAPE TOWN, South African Finance Minister Pravin Gordhan has announced an increase in sin taxes for consumers of alcohol and tobacco.

Tabling the 2017 Budget in the National Assembly here Wednesday, he said alcohol and tobacco excise duty rates would be raised by between 6.1 per cent and 9.5 per cent this year. This is likely to leave a bitter taste in the mouths of drinkers and smokers, with increases likely to be passed on to consumers.

According to the National Treasury’s Budget Review document, the targeted excise duty burdens for wine, beer and spirits are 11 per cent, 23 per cent and 36 per cent of the weighted average retail price respectively.

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%,” the Treasury says.

Treasury also notes that 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 8.0 and 9.5 per cent.”

The proposed changesl mean that an excise duty of 149.6 cents will be charged on every 340 mililitre can of malt beer, up from the current 135 cents. and a charge of R14.30 will be imposed on a box of 20 cigarettes, an increase of 8.0 per cent from the current R13.24 per 20 cigarettes.

Source: NAM NEWS NETWORK