South Africans to pay more for beer, wine and cigarettes

Sin taxes on alcohol will rise by between 6.7% and 7.2% over the next year to help the government raise additional revenue to close its massive deficit. Tobacco products will also increase by between 4.7% and 8.2%.

This was revealed by Finance Minister Enoch Godongwana in his 2024 Budget Speech, where he outlined how the government plans to increase tax revenue by R15 billion in the 2024/25 financial year. 

Godongwana said the R15 billion would mostly be made up by not adjusting tax brackets, rebates, and medical tax credits for inflation. 

This is referred to as ‘bracket creep’, whereby inflation pushes some taxpayers into higher tax brackets, making them pay more tax and thus resulting in greater revenue without hiking rates. 

As part of increased revenue collection, Godongwana will also raise excise duties on alcohol, cigarettes, and vape products.

The increases for alcohol products are above inflation and are listed below –

• A can of beer increases by 14 cents
• A can of cider and alcoholic fruit beverage increases by 14 cents
• A bottle of wine increases by 28 cents
• A bottle of fortified wine increases by 47 cents
• A bottle of sparkling wine increases by 89 cents
• A bottle of spirits, including whisky, gin, or vodka, increases by R5.53 

In South Africa, different forms of alcohol are taxed differently.

Beer is taxed based on the litres of absolute alcohol or the alcohol by volume (ABV), and wine is taxed based on litres irrespective of the ABV.

The Beer Association of South Africa (BASA) asked previously for this calculation to change, saying that the current way of taxing alcoholic beverages disproportionately disadvantages beer.

Beer has one of the lowest ABV contents yet is highly taxed compared to other alcohol products like wine, said BASA.

“This disadvantage becomes apparent in beer products above 4.5% ABV, with the highest prejudice experienced by the craft beer sector, where beer ABV is generally around 7%. Beer is taxed R3.54 more than wine with the same ABV,” said the association in 2022.

BASA has previously asked for the implementation of an ABV excise duty system whereby all alcohol products are taxed proportionally to their alcohol content.

Tobacco products, on the other hand, will increase below inflation at 4.7% for cigarettes and cigarette tobacco. Pipe tobacco and cigars will rise by 8.2%. 

This will result in the below increases in prices –

• Cigars will increase by R9.51 
• A pack of cigarettes will increase by 97 cents
• A pipe of tobacco will increase by 57 cents

The Minister also tabled an increase in the excise duty on electronic nicotine and non-nicotine systems, known as vapes, to R3.04 per millilitre.