After bans or restrictions due to Covid-19 last year, the South African government has now announced that it will increase the excise duties on alcohol and tobacco products by 8%.
This translates to an increase of SAR1.39 per 20-cigarette pack, SAR1.57 per 50g cigarette tobacco, SAR0.40 per 25g pipe tobacco, and SAR7.71 per 23g for cigars.
The excise tax hike comes as the National Treasury took a decision to reverse its earlier announcement of additional tax measures that would have raised SAR40 billion amid a revenue shortfall. The policy framework for both alcohol and tobacco will be reviewed in the current year.
The South Africa Tobacco Transformation Alliance (SATTA) said that it believes that government is “going about it the wrong way” on its desire to increase tax revenue.
SATTA spokesperson, Zachariah Motsumi, said in a statement, “An 8% excise increase equates to an increase of SAR1.39 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.”
“According to our research, the illicit market grew by a staggering 3.1 billion cigarettes in a single year. That’s a loss of excise revenue of almost R13-billion for the government, and billions more for farmers, processors and manufacturers.”