Belinda Beresford
The expectations of smokers, drinkers and drivers of large cars were all confirmed again in this year’s budget: yes, the sin taxes are going up again.
Minister of Finance Trevor Manuel announced that excise duties on all tobacco products will rise with immediate effect. The government aims to keep the total tax on tobacco products at 50% of the retail price “in accordance with our long-standing health policy”, said Manuel. A packet of 20 cigarettes will cost 38c more, while 25g of pipe tobacco will suffer a 35c increase. He noted that consumption of taxed cigarettes declined from 36-billion in 1993/94 to about 30-billion in 1998/99.
Duties on alcohol were increased in line with inflation – an extra 2c on a can of beer or cider, and 2,6c on a bottle of wine. Fortified wines face a 6c a bottle increase in tax, while “the excise duty on a bottle of spirits – whether gin, ouzo, grappa or any other too obscure to mention – goes up by 51c a bottle”.
Manuel said that as part of its drive for equity the government has to look at the progressive or retrogressive nature of taxes, and indirect taxes tend to fall more heavily on the poor, while sin taxes are also affected by public welfare considerations. However, since sorghum beer is largely drunk by the poor, the government has decided not to increase the excise duty on such products, to reduce the regressive nature of excise duties. For the same reasons there would be no increase in the excise duty on it, said Manuel.
Soft drinks will see a fall in excise duty from 12c to 8c a litre. This was driven by research showing that the poorest 20% of the population spends about 1,6 times as much as the richest 20% on soft drinks consumed at home.
Environmentalists may argue that driving an internal combustion-driven vehicle is a sin. At any rate, according to the budget review, the government is considering consolidating all the taxes levied on fuel. Currently the total tax on leaded petrol is 109,1c a litre, and 102,9c on unleaded fuel. The consolidated tax on diesel is 90,4c a litre. With effect from April 5, Manuel said, the fuel levy will rise by 5c a litre on petrol, and 3c on diesel.
Another related sin has joined the list – air travel. From August 1, the approximately 2,7-million international passengers leaving South African airports will pay R100 each on a passenger departure tax. It is uncertain whether this will apply to flights to countries such as Lesotho or Swaziland. A government official also said it is still open to debate whether this would apply to children under the age of two, who do not have a seat when flying.