Vices will leave a burning hole in your pocket

Published Mar 18, 1998

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Indulging in smoking and drinking alcohol is going to take a bigger slice of your monthly budget.

In his Budget Finance Minister, Trevor Manuel, targeted sin taxes to raise money for more pressing needs such as poverty relief programmes and education.

While Manuel has not given in to the recommendations of health authorities to raise excise duties on tobacco to 50 percent of the retail price, but if you are a smoker, you are going to have to cough up 29 percent more in excise duties to sustain your habit.

A packet of 20 cigarettes will cost an extra 46 cents and pipe tobacco will increased by R2,11 a kilogram.

Sorghum beer has escaped the excise duty increase, but if other alcoholic beverages are your vice, you are going to have to fork out more.

* A 340 ml can of beer will cost 1,6 cents more;

* Ciders will increase by nine cents per 340 ml can;

* Cane spirits go up by 65,7 cents per 750 ml;

* Grain spirits increase by 48,2 cents per 750 ml; and

* Unfortified wine goes up by 5,9 cents per 750 ml.

"The Budget did not provide any shock as far as the traditional raising of 'sin taxes' is concerned," says tax consultant Eugene Marais, at KPMG.

It should however be borne in mind that these taxes are an enormous source of revenue for the fiscus and sooner or later increases in these duties may lead to negative growth in revenue.

The government uses such huge hikes in duties as a deterrent against the use or misuse of tobacco and alcoholic products, he says.

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