Government will increase the excise duties on alcohol and tobacco products by between 4.5% and 6.5%, the National Treasury said on Wednesday (23 February).
Presenting his 2022 Budget Speech, finance minister Enoch Godongwana said that the following increase will take effect immediately:
- A 340ml can of beer or cider will cost 11c more;
- A 750ml bottle of wine will be 17c more expensive;
- A bottle of sparkling wine will cost an additional 76c;
- And a bottle of spirits will be R4.83 more expensive;
- A packet of cigarettes will cost an additional R1.03;
- 25 grams of piped tobacco will cost an extra 37c; and
- A 23 gram cigar will be R6.77 more expensive.
Godongwana also confirmed that government is proposing to introduce a new tax on vaping products of at least R2.90 per millilitre from 1 January 2023.
A new tax will also be introduced on beer powders, the finance minister said. After three years of no changes, the health promotion levy will also be increased to 2.31 cents per gram of sugar, he said.
Prior to the budget speech, South African Breweries called on the government to reduce the excise tax rate in its national budget on Wednesday (23 February) or face further disinvestment and job losses.
In a media briefing on Monday, the group warned that South Africa was not currently an investment-enabling environment and that it could look at importing certain products which could be harmful to the local economy.
It said that smaller players in the alcohol industry will also benefit from a reduced excise tax after months of lockdown restrictions decimated businesses – with more than 30% of local craft breweries forced to close and over 150,000 jobs lost.
“Blanket tax rates that lack nuance – that do not, for instance, take into consideration the size of the business and the weight of the tax liability it must bear – require a serious review,” the group said.
“For the sake of our industry, and the thousands of small businesses that call it home, we welcome any call from the government to reassess how excise policies can help create a business-enabling environment.”
This echoes similar calls by the Beer Association of South Africa (BASA), which said that South Africa should introduce an excise tax sliding scale based on beverage type and alcohol strength similar to other countries.