JOHANNESBURG - Sin tax is a levy placed on certain products that are not necessarily essential for daily survival, but has an impact on health and social behaviour.
The levy is applied to alcoholic drinks like beer and wine, tobacco products like cigarettes and e-cigarettes as well as sugary drinks, also known as health promotion tax.
In 2024, excise duty on alcohol increased by between 6.7 and 7.2 percent.
That's much higher than inflation and what the greater industry asked for.
For the average user, sin tax means that cigarettes and drinks will become more and more expensive, placing them under financial pressure.
This increase also raises the risk of more illegal tobacco products flooding the market.
The excise taxes on sugary drinks have been enforced since 2018 and it’s widely expected it may be increased to combat obesity and health issues.
Meanwhile, South Africa Wine has expressed serious concerns about the potential impact proposed changes to wine excise taxation, may have on the industry's sustainability and competitiveness.
“The timing and scope of these proposed taxation changes could not be more challenging for our industry,” says Rico Basson, CEO of South Africa Wine.
“What’s particularly concerning is that our current excise tax burden already exceeds the target rate of 11 percent and is significantly higher than our competitor wine-producing nations,” explains Basson.
“The proposed framework would push us further out of alignment with global competitors, seriously compromising our international competitiveness and severely hampering our ability to contribute to economic and socio-economic spheres from rural agriculture to market.”
Basson said with 80 percent of South African wines having the alcohol content above 9 percent, they’re looking at a staggering 7 percent weighted average increase in excise rates across the industry.
“This is unsustainable for many producers, particularly small-scale farmers and cellars,” he said.
Stay tuned to #DStv403 for full coverage of the budget speech and its impact on the everyday South African.
- by Estelle Bronkhorst
