SIN TAX: Smokers and drinkers feel the squeeze
But share prices remain firm despite extra taxes on tobacco products and a wide range of alcoholic beverages
Smokers and drinkers will find little cheer in the 2019 budget, which asks "sinners" to chip in an extra R1bn to the national fiscus in the financial year ahead. Finance minister Tito Mboweni aims to raise R400m from additional excise duties on tobacco product sales, and another R600m from an array of alcoholic beverages.
This year’s sin tax table breaks down as follows: the excise duty on a can of beer goes up by 12c to R1.74, while a bottle of wine will have an excise duty of R3.15 (a 22c increase). The duty on a bottle of sparkling wine goes up by 84c to R10.16, and the duty on a bottle of whisky will go up by R4.54 to R65.84.
Smokers also cough up considerably more for their habit. The duty on a pack of 20 cigarettes goes up by R1.14 to R16.66, while the excise duty on a typical cigar will go up by about 64c to R7.80.
Independent analyst Anthony Clark bemoaned the excise duty increase. "If consumers were not depressed enough with a struggling economy, rolling blackouts and a rising cost of living … Now they also have to think twice about rushing out and buying ciggies and alcohol to alleviate the gloom."
Sin shares on the JSE seemed oblivious to the excise duty increase — which, market watchers stressed, are now a "dead certainty" in the budget. Beer giant AB InBev and tobacco behemoth British American Tobacco (BAT) were both firmer after the budget speech. In truth, though, both companies have much bigger markets outside SA.
Distell, the Remgro-controlled liquor conglomerate, has SA as its core market, with wine, spirits and ciders as its mainstay. While the excise duties could cause a leak in sales, Distell was slightly firmer on the day.
A liquor industry source said the increases were not as bad as expected, and "certainly better than last year’s budget". He cautioned, though, that VAT was also affecting liquor prices, and that categories like wine would also face pricing pressure from the prolonged drought in the Western Cape.
"Overall, though, the Treasury seems to be listening to the liquor industry. The approach is pragmatic."