Smokers, drinkers hit hard

South Africa’s Treasury plans to raise an extra R1 billion from increases in excise taxes on tobacco products and alcohol, according to a story in The Business Daily.

The Daily said that smokers were expected to provide the Treasury with an additional R400 million [presumably in the first year of higher taxes], while drinkers were expected to provide

an extra R600 million.

The excise duty on a pack of 20 cigarettes will rise by R1.14 to R16.66, and that on a typical cigar by about 64c to R7.80.

The Treasury’s plans fly in the face of an appeal made earlier in the week by the recently-launched Black Tobacco Farmers Association (BTFA), which warned that the entire tobacco value chain in South Africa was under threat from illicit traders; a threat that could increase if a proposal to increase excise taxes again were accepted.

According to a story in The Business Day, it was estimated that close to 50 percent of South Africa’s tobacco-products market was controlled by illicit players, making it one of the world’s biggest markets for illicit tobacco products.

The illegal trade in tobacco products was said to be costing the fiscus up to R9 billion a year in uncollected tax.

The BTFA called on the government to keep tobacco excise taxes at their current level to protect jobs on farms.