SIN TAX: Going easy (kinda) on the sinners

After so many years of regular excise duty increases, those indulging in habitual vices can pretty much bank on the budget putting another dent in their wallets. So if there was any consolation this week, the sin taxes were broadly in line with expectations — and inflation: that is, hikes of between 4.5% and 6.5% on alcohol and tobacco products.

It means, with immediate effect, that consumers will pay 11c more for a can of beer or cider, 17c more for a 750ml bottle of wine and R4.83 extra for a bottle of spirits. A packet of 20 cigarettes will cost an extra R1.03, pushing some premium brands close to R50 a pack. Pipe tobacco (25g) will cost an extra 37c and a 23g cigar will cost R6.77 more.

The government is clearly not viewing noncombustible tobacco products any differently from traditional cigarettes, and has proposed to introduce a new tax on vaping products of at least R2.90 a millilitre from the start of 2023.

The decision to tax vaping products will be contentious, at least for big tobacco companies that are heavily punting vapes as a "healthier" alternative to traditional cigarettes.

Excise duties have increased by more than inflation in recent years, so the increase range would hardly have stunned industry players.

SA Breweries (SAB) CEO Richard Rivett-Carnac believes the inflation-linked hikes are an acknowledgement of the adverse effects caused by the pandemic — and the government’s despised alcohol bans — which destroyed 30% of small, medium and microbreweries in the industry. "We are encouraged by the positioning of the budget that has prioritised economic recovery ... This will go a long way in providing tax relief to our value chain."

Rivett-Carnac adds that inflation-linked excise changes will allow SAB to plan for greater capital investment in SA. "Tax policy guidelines that are closely adhered to by the government encourage investment and economic growth … by reducing the uncertainty around future tax obligations."