The cost of an average pack of 20 cigarettes in South Africa is likely to experience a 52c rise in excise duty from Wednesday, when Minister of Finance Trevor Manuel unveils the government’s 2005/06 Budget, according to the Tobacco Institute of South Africa (Tisa).
Including value-added tax (VAT), the retail price of a pack of cigarettes should rise by 70c from Wednesday, Tisa spokesperson Andre van Plettsen said.
The increase in excise duty is in line with the government’s policy of maintaining a 52% tax incidence on cigarettes — maintaining the level of excise tax at 52% of the retail selling price.
“We are expecting a … 70c rise in the price of a pack of cigarettes,” Van Plettsen said. “We are not expecting any deviation from the government’s announced policy of 52% tax incidence as outlined last year.”
Meanwhile, alcoholic-beverage producers are expecting an above-inflation increase in the excise duties imposed on wine, spirits and beer from Wednesday as well, according to Distell, South Africa’s largest listed wine and spirits producer.
The increases will be aimed at maintaining the government’s policy, introduced in the 2003/04 Budget, which sets the total tax burden, comprising excise duties and VAT — measured as a percentage of the weighted average retail selling price — for spirits, clear beer and wine at 43%, 33% and 23% respectively.
Distell corporate affairs director Andre Steyn said the increase will be “reasonably high” for the year, and that the company is currently engaged with the government on the issue of determining the “average” retail selling price of alcoholic beverages in the various categories.
Beer is likely to see the lowest increase, while those for wine and spirits should be the largest.
The government indicated in the 2003/04 Budget that these percentages will be implemented within three to five years, and the gap is largest in wine and spirits. — I-Net Bridge