No mercy for the ‘sinners’

2014-02-27 00:00

BEWARE the sinners! They are, in Budget-speak, the smokers and even the old-aged couple who enjoy a tipple before sunset.

Pravin Gordhan has no mercy. It must be added, though, that the finance minister will not be the first in a long line of his predecessors who have targeted South Africans with the so-called sin tax.

The tax burden for tobacco products will be 52% of the retail selling price of the most popular brand within each category. That means excise duties on tobacco products will increase by 2,5% and nine percent. In effect, it means 68 cents more on a packet of 20 cigarettes. The below-inflation (2,5%) hike for pipe tobacco is due to the 2013 Budget adjustment, which exceeded the targeted tax.

A big enough shock to make a smoker yearn for a drink? Don’t bet on that. There is a shock for them too.

As was expected, Gordhan announced that the targeted tax burdens (excise duties plus VAT) seen as a percentage of the weighted average retail selling price for wine, clear beer and spirits are 23, 35 and 48% respectively.

In line with that, alcoholic beverages will increase by between 6,2% and 12% this year. It means a 340 ml can of beer will cost nine cents more, while whisky goes up by R4,80 a bottle.

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