Now that “sin taxes” have been upped from 4,5% to 10,3% on alcohol and 6% to 10,2% on tobacco products, you may want to consider cutting back on your indulgences because more punishment could lie in wait — and you really could do better things with the cash.
Sylvester Kgatla uses smoking as an example.
The Tobacco Institute of Southern Africa estimates that the average smoker has about 11,6 cigarettes a day. If manufacturing costs are taken into account, the lowest cost of a 20-pack is about R13,50. This works out at over R200 a month, or R2 400 a year. If the price remained at R13,50 for the next five years (which it won’t), that R12 000 in five years. Dramatic, isn’t it?
Smokers argue that their indulgence is worth it for the enjoyment. But what about their financial health (leaving physical health aside)?
If you chose to increase your bond repayments, you’d save a lot in the long term. Repaying an extra R200 a month towards a 20-year home loan of R600 000 would, at current interest rates, reduce your payment period by a whopping two years (23 months at a rate of 10%). On a R1m bond, an extra R200 a month would reduce your payback period by 15 months (using the same 20-year benchmark).
It does make sound financial sense — the question is, will smokers take the advice?
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