Tax hike for South African “sinners”

Smokers and drinkers will again be heavily taxed for their (in the eyes of the Government) bad habits.

The duty on a packet of 20 cigarette will for example rises with 6.7% from R12.43 to R13.24 and that on a can of beer (340ml) with 8.5% from 124c to 135c.

The price of 1 liter of wine will rise by 8% (24c), 1 liter of sparkling wine will also be 8% (78c) more expensive, and spirits 8.2% (394c for a bottle of 750 ml) more expensive.

The duty on ciders and alcoholic fruit beverages will rise by 8.5% (R6.21 for 1 liter).

Cigar smokers will also pay 6.7% more (R4.68 for 23g) and pipe smokers 7% more (27c for 25 g).

Tax rates on alcoholic beverages have been consistently increased beyond inflation since 2002. The 2016 Budget continues this trend, with excise duty rate increases of between 6.7% and 8.5%.

Mixtures of grain-fermented beverages (such as beverages made from maize) with an alcohol content ranging from 2.5% to 9% by volume are proposed as an additional excise duty category.

These beverages will be taxed at the beer rate based on absolute alcohol content.

Historical changes in duty structure and regulatory requirements have led to brandy being at a competitive disadvantage relative to other spirits.

To level the playing field, government proposes that a 10% lower excise duty, based on litres of absolute alcohol content, be applied to potstilled and vintage brandy, and phased in over the next two years.

The excise duty on sparkling wine has risen well above inflation in recent years, mainly due to the influence of high-priced imports.

As a result, the difference between the excise duties on sparkling wine and still wine has increased substantially.

It is proposed that the current difference between the excise duties on natural and sparkling wine be maintained by pegging the sparkling wine excise rate at 3.2 times that of natural unfortified wine.

The excise adjustments for cigarettes, cigarette tobacco and pipe tobacco are attributable to inflation-linked price increases for the most popular brands in each category.

A review of tobacco product taxation will begin in 2016/17, and will consider both existing and non-traditional tobacco products and their alternatives, such as e-cigarettes.

Fin24

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Tax hike for South African “sinners”