Proposed Increase In Excise Duties On Alcoholic Beverages And Tobacco Products

In the recently announced 2024 Budget Review, Finance Minister Enoch Godongwana has proposed an increase in excise duties on alcoholic beverages and tobacco products for the upcoming fiscal year.

The aim of these proposed increases is to address the higher tax incidence resulting from the previous years’ excise duty hikes.

For alcoholic beverages, the proposed increase in excise duties ranges between 6.7% and 7.2% for the year 2024/25. According to the Treasury, the guideline excise tax burdens for wine, beer, and spirits are currently set at 11%, 23%, and 36% respectively of the weighted average retail price.

So, what does this mean for consumers? Let’s break it down:

1. Beer: The proposed increase will result in a 14 cents rise in the price of a can of beer.
2. Cider and Alcoholic Fruit Beverages: Similar to beer, a can of cider or alcoholic fruit beverage will also see a 14 cents increase.
3. Wine: A bottle of wine will go up by 28 cents due to the proposed excise duty hike.
4. Fortified Wine: For fortified wine, consumers can expect a 47 cents increase per bottle.
5. Sparkling Wine: The proposed excise duty increase will add an extra 89 cents to the cost of a bottle of sparkling wine.
6. Spirits: This category, which includes whiskey, gin, or vodka, will see the largest increase. A bottle of spirits will cost an additional R5.53.

In addition to the proposed increases in excise duties on alcoholic beverages, the government also plans to raise excise duties on tobacco products. The proposed increase for cigarettes and cigarette tobacco is 4.7%, while pipe tobacco and cigars will face an 8.2% hike in excise duties for the year 2024/25.

The specific impact on consumers is as follows:

1. Cigars: There will be a significant increase of R9.51 cents per cigar.
2. Cigarettes: A pack of cigarettes will see a 97 cents increase in excise duties.
3. Pipe Tobacco: For those who smoke pipe tobacco, there will be a 57 cents increase per pipe.

Furthermore, the government has implemented an excise duty on electronic nicotine and non-nicotine delivery systems, commonly known as vaping. This duty was introduced on 1 June 2023 at a flat rate of R2.90 per milliliter for both nicotine and non-nicotine solutions. The proposed increase for 2024/25 will raise the excise duty to R3.04 per milliliter, in line with expected inflation.

The decision to increase excise duties on vaping products aligns with the concerns raised by Kamogelo Mogane, a Soweto resident who suggested introducing a tax payment for hubbly bubbly, e-cigarettes, and other alternatives. Minister Godongwana acknowledged the rise in youth consumption of these products and the concerns of parents. As a result, the proposed increase in excise duty on electronic nicotine and non-nicotine delivery systems aims to discourage their use and mitigate associated health risks.

In conclusion, the proposed increase in excise duties on alcoholic beverages and tobacco products for 2024/25 aims to address the higher tax incidence resulting from previous years’ hikes. While this may lead to price increases for consumers, the government aims to strike a balance between revenue generation and discouraging excessive consumption of these products.

Please note that these proposed increases are subject to approval and may be adjusted during the legislative process.