• National treasury officials said more than 50% of tobacco products and 20% of liquor products are taxed.
  • They said excise duties, or sin tax, on cigarettes are calculated to be 40% of overall price, and adjusts annually accordingly.
  • Finance minister Tito Mboweni said treasury will soon start to tax e-cigarettes and heated tobacco products.
  • For more stories visit Business Insider South Africa.

More than 50% of the price of tobacco products, and more than 20% of liquor products sold in South Africa goes to tax, national treasury said. 

This as the state moves to start taxation on e-cigarettes.

During his Budget speech on Wednesday afternoon, Finance minister Tito Mboweni said taxes on liquor would increase by 4.4%, on sparkling wine by 6% and on tobacco by 7.5% at the beginning of April.

This means South Africans will now pay R4.39 per litre unfortified wine (wine with less that 15% alcohol content); R7.34 a litre for fortified wine (wine with more than 15% alcohol content), R14.36 a litre for sparkling wine; R106.56 per litre ciders and alcoholic fruit beverages; and R213.13 a litre spirits.

Cigarettes will now be taxed at R17.40 per 20 cigarettes, R19.55 per 50g cigarette tobacco, R5.79 per 25g pipe tobacco and R96.45 per 23g cigars.

The price of malt beer will increase from R102.07 per litre to R106.56 per litre. 

Speaking to Business Insider South Africa on the side lines of the release of Mboweni’s Budget, treasury officials said the government’s target is to keep excise duties, or sin tax, on cigarette products at 40% of the overall cost price. 

Officials said increases are calculated to ensure that 40% of a popular cigarette brand’s price is excise duties.

Before 2015, the 40% used to include the value added tax on cigarettes, but this has since been added on top of the 40%.

More than 50% of tobacco product’s price therefore goes to tax. 

For liquor products, officials said excise duties are calculated to 36% of the average price of spirits, 11% of the average price of wine and 23% of the average price of beer.

Excise duties on liquor also excludes VAT which is added above what is already taxed. 

Officials said wine is taxed lower to support South Africa’s wine producing regions. 

During his budget speech, Mboweni said heated tobacco products containing addictive substances and other chemicals  such as hubbly bubbly will soon be subject to excise duties of 75% of cigarette excise rates.

He said electronic cigarettes, or vapes, will be taxed from 2021 in South Africa.

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