Clean up your act and save on sin taxes

2015-02-26 00:00

THE government has raised taxes on alcohol and tobacco products once again.

Tax rates on alcoholic beverages have consistently increased above the inflation rate since 2002, and yesterday’s Budget was no exception.

Excise duty increases for alcohol products increased by an average 4,8%-5,8%, while the excise duty on tobacco products increased by between 5%-7%.

For instance, the duty on malt beer increases from R1,17c per average 340ml can to R1,24c per can.

The duty on fortified wine increases from R5,21/litre to R5,46/litre, while a bottle of spirits will be R3,77 dearer. The duty on a pack of 20 cigarettes increases to R12,42/20 cigarettes, from R11,60.

Lianne Williams, head of marketing at Multiply, Momentum’s Wellness and Rewards programme said a pack of 20 cigarettes will now cost around R36,62, or R13 366,30 per year for someone who smokes one box a day. For someone who smokes 40 a day, that amount soars to over R25 000.

“This is a significant amount of money that could be spent on boosting your financial wellness, whether you invest in a retirement product, an education policy, or improved medical cover,” said Williams.

If a smoker quits the habit at age 30 and invests the R13 366 each year in a retirement product, with inflation-linked increases, that investment may be worth R6,5 million when it matures as the policyholder retires at age 65, she said.

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