Supplementary Budget 2020

Smokers to pay tax for hubbly bubbly, e-cigarettes and other alternatives

The prices of alcohol, cigarettes and other tobacco products are going up on March 1, due to an increase in the rate of sin taxes. Smokers will also start paying tax for e-cigarettes and heated tobacco products.

Taxes on beer, ciders and non-sparkling wine, spirits and cigarettes will all increase by 4.4%.

Users of pipe tobacco as well as cigar smokers will pay an additional 7.5% in sin taxes.

This will translate to an additional R2.89 for a 750ml bottle of whiskey, vodka or gin, and 7.5 cents more for a 340ml can of malt beer.

Sparkling wine will cost 61 cents more, a packet of 20 cigarettes will cost an additional 74 cents at the tills and a 23-gram cigar will be R6.73 more expensive.

The sin taxes, which National Treasury hopes will raise R112.7 billion together with customs duties, are a category of revenue that did not fall short of what government had budgeted to collect in the 2019/20 tax year. Instead, they were ahead of targeted collection by R4.4 billion.

Taxes on income and profit, by contrast, fell short by over R42 billion.

New products to be taxed

Heated tobacco products that don’t produce smoke, such as Iqos, which have not been subject to excise duties, will start paying taxes immediately. The budget documents said that government will introduce a new category of tariff or tariff subheading for these products which will be equal to 75% of the cigarette excise rate.

Consumers will also start paying taxes on e-cigarettes in 2021. But for now, no specific excise duty has been levied on marijuana.

"In line with the Department of Health policy, we will start taking heated tobacco products, for example bubbly bubbly," said Mboweni in his budget speech.

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