Taxes Rising On Alcohol, Tobacco and Carbon

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South Africa's economy showed weak performance, resulting in a sharp decline in tax revenue collection in the last financial year. To address the immediate fiscal pressure and support faster debt stabilisation government has proposed several tax increases


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Finance Minister Enoch Godongwana revealed that tax revenue for 2023/24 amounted to R1.73 trillion. This was R56.1 billion lower than the estimate in the 2023 Budget.

The minister made this revelation during the 2024 National Budget Speech. The budget speech was delivered on Wednesday at the City Hall in Cape Town. 

The shortfall primarily stems from declining corporate profits and revenue from taxes on mining. Over the medium term, revenue projections exceed the 2023 MTBPS estimates by R45.6 billion, driven by increased personal income tax and additional medium-term revenue proposals

To alleviate immediate fiscal pressure and support faster debt stabilisation, tax measures in the budget will raise R15 billion in 2024/25. The majority of revenue will be generated through personal income tax adjustments, including tax brackets, rebates, and medical tax credits not being adjusted for inflation.

The government proposes above-inflation increases ranging between 6.7% and 7.2% for 2024/25. This translates to increases in:

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

National Treasury has also proposed increasing tobacco excise duties by 4.7% for cigarettes and cigarette tobacco, and by 8.2% for pipe tobacco and cigars. This leads to increases of:

  • R9.51 cents for cigars
  • 97 cents per pack of cigarettes
  • An additional 57 cents for pipe tobacco
  • Additionally, the Minister announced an increase in excise duty on electronic nicotine and non-nicotine delivery systems (vapes) to R3.04 per millilitre.

Concerning environmental taxes, the carbon tax has been raised from R159 to R190 per tonne of carbon dioxide equivalent as of 1January 2024. The carbon fuel levy will increase to 11 cents per litre for petrol and 14 cents per litre for diesel from 3 April 2024.

Furthermore, a discussion paper outlining proposals for the second phase of the carbon tax will be published for public comment later in the year. 

The Minister emphasised the government's awareness of the high cost of living and the impact of fuel prices on food and transport costs. Consequently, there will be no increases to the general fuel levy for 2024/25, resulting in tax relief of approximately R4 billion, which will benefit consumers.

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