South Africa Proposes Sin Tax Increases for Alcohol and Tobacco in 2025

The South African government will increase excise duties on alcohol by 6.75% and tobacco by 4.75% for the 2025/26 fiscal year, above the expected inflation rate. Specific duty adjustments for various categories have been outlined, with changes effective from April 1. Public consultations regarding a new alcohol taxation framework are planned for 2025.

The South African government plans to adjust excise duties on alcohol and tobacco products in the 2025/26 financial year, proposing increases that surpass expected inflation rates. According to the National Treasury, the excise duties on alcoholic beverages will rise by 6.75%, while those on tobacco products—cigarettes, cigarette tobacco, and vaping systems—will see a 4.75% increase. The excise duty on pipe tobacco and cigars is also set to increase by 6.75%.

To alleviate administrative challenges during Budget Day, future adjustments to these duties will be effective from April 1st. Legislative measures concerning unexpected cigarette clearances enacted in 2021 may continue to be in effect. The government has also published a discussion paper on the taxation of alcoholic beverages, proposing a progressive three-tier structure for excise duties on wine and beer, with public consultations planned for 2025.

The specific changes in excise duties for the upcoming financial year are as follows: unfortified wine will increase from R5.57 to R5.95 per litre; fortified wine will rise from R9.40 to R10.04 per litre; and sparkling wine will go from R17.83 to R19.03 per litre. Additionally, ciders and alcoholic fruit beverages will increase from R135.89 to R145.07 per litre of absolute alcohol. Spirits will rise from R274.39 to R292.91 per litre, and cigarettes will go from R21.77 to R22.81 for a pack of 20. Furthermore, the excise duty on cigarette tobacco will increase from R24.47 to R25.63 for 50g.

The 2025/26 budget in South Africa outlines significant increases in excise duties for both alcohol and tobacco products, reflecting a strategy that aims to exceed inflation rates. Specific rates for various beverages and tobacco products have been proposed, with adjustments set to take effect in April. This move, alongside the introduction of a new taxation framework for alcoholic beverages in 2025, indicates a comprehensive approach to adjust fiscal policies in line with public health and revenue objectives.

Original Source: www.zawya.com