Cigarette and booze makers are getting a R6 billion tax holiday to make up for lockdown

Business Insider SA
Booze and smokes
  • Makers of alcoholic drinks and tobacco products are getting a three-month payment holiday on sin taxes.
  • Payments that were due in May and June would have been worth around R6 billion, the National Treasury says.
  • Excise duties are paid at the point of manufacture – and right now booze and cigarettes can't be sold.
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The makers of alcoholic drinks and tobacco products are getting their own payment holiday, South Africa's National Treasury announced on Thursday: 90 days extra to pay excise taxes that were due in May and June.

Like payment holidays on consumer debt and other assistance, the deferral is only available to already sin-tax-compliant businesses.

Between them, Treasury expects, they will save some R6 billion that would have been payable to the state over those two months.

See also: Want to make beer from pineapples? If you get it wrong, you may get ill – or maimed

"The primary function of these duties and levies is to ensure a constant stream of revenue for the state, with a secondary function of discouraging consumption of certain harmful products; i.e. harmful to human health or to the environment," according to the SA Revenue Service (Sars).

Excise duties – which are also levied on petrol and cosmetics – are imposed at the point of production. But the makers of those products have seen their cashflow disappear thanks to strict lockdown rules that allow no sale of alcoholic drinks or tobacco products.

The deferral of duties will allow such manufacturers to better align their tax payments with their retail sales, Treasury said.

See also: All cigarettes are bad, but illegal ones are worse – especially right now. Here’s why

South Africa's market for illegal cigarettes – which avoid taxation entirely – is believed to have exploded during the lockdown period.

South Africans have also frantically tried to learn how to make their own booze, often from pineapples.

(Compiled by Phillip de Wet)

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