Inflation based health tax increases are not enough to make a difference
Finance Minister Enoch Godongwana’s inflation adjusted increases to the excise duties on alcohol and tobacco will do little to reduce excessive consumption and the social and health costs associated with these products.
Godongwana tabled the inflation-based increases as part of his budget speech yesterday. He announced that tax on a 20-pack of cigarettes will rise from R22.81 to R23.58 while pipe tobacco rises by 28c per 25g, cigarette tobacco by 87c per 50g and cigars by R4.56 per 23g.
For alcohol, a 340ml can of beer or cider increases by 8c, while a 750ml bottle of wine goes up by 15c and a 750ml bottle of spirits will increase by R3.20.
His increases come on the back of announcements by President Cyril Ramaphosa in his state of the nation address in early February that a review of the alcohol taxes would be on the cards.
Commenting on the increases, Rural Health Advocacy Project executive director Russell Rensburg said: “Health taxes can only make a difference if they are significantly higher than inflation. The reality is that these increases are far from enough to make a difference.”
He said, “the fact that Godongwana mentioned the taxes in his speech signalled that National Treasury does have a commitment to further reviews of alcohol taxes.”
The Health Tax Alliance has been calling on the government to increase the taxes on alcohol, tobacco and sugar above inflation, in line with recommendations by the World Health Organisation. The global body argues that above inflation increases in these health taxes is a best buy as it reduces consumption, reduces the disease burden caused by these products and generates revenue.
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