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Following Finance Minister Tito Mboweni’s budget speech on Wednesday, 24 February 2021, smokers and drinkers will now be digging deeper into their pockets thanks to an increase in taxes.
During his speech, Mboweni announced an 8% increase in sin taxes, with the prices on alcohol and tobacco products set to spike with immediate effect.
Newcastillians can now expect the following price increases:
- 340ml can of beer or cider will cost an extra 14 cents.
- 750ml bottle of wine will cost an extra 26 cents.
- 750ml bottle of sparkling wine an extra 86 cents.
- A bottle of 750 ml spirits, including whisky, gin or vodka, will increase by R5.50.
- A packet of 20 cigarettes will be an extra R1.39 cents.
- 25 grams of piped tobacco will cost an extra 47 cents.
- A 23-gram cigar will be R7.71 more expensive.
Mboweni explained that excessive alcohol consumption could lead to negative social and health outcomes. Considering this, he pointed out, “Consumers do react to price increases, and higher prices should lead to lower consumption of alcohol products with positive spinoffs.”
Responding to the increase in tobacco products, South Africa Tobacco Transformation Alliance (SATTA) stressed, “An 8% excise increase equates to an increase of R1.39 in the price of a legally produced packet of cigarettes. It means nothing to those who manufacture and sell illegal cigarettes, apart from making their illicit products even more affordable. It will drive more and more people towards the illicit market – which means the Government will make even less money than it made before.”
Moreover, SATTA, which represents the entire legal cigarette production value chain, claims they have consistently argued that excise charges should not be increased to avoid consumers switching from legal to illegal products.
In addition, Kurt Moore, CEO of the South African Liquor Brand Owners Association (SALBA), highlighted, with thousands of businesses across the value chain looking into the financial abyss, due to the three alcohol sales bans. With no contingency plan for tax increases, these businesses will now be forced to take further steps to cut costs, which could see even more people lose their jobs. Furthermore, Moore emphasises, “The 8% increase on legal alcohol gives an opportunity for further growth in illicit trade competitiveness, as more consumers are less able to afford legal, tax-paying alcohol products.”
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