The Fair-Trade Independent Tobacco Association (FITA) expressed disappointment in the decision to increase sin taxes.
Finance Minister Tito Mboweni tabled his 2021 budget yesterday and announced the 8% increase in the excise duties levied on alcohol and tobacco products.
What does this mean for the average South African?
The tax increase means South Africans will be forking out more on a 340ml can of beer or cider, which will now cost an extra 8c, while a 750ml bottle of wine will cost 14c more.
Other increases will see a 750ml bottle of sparkling wine cost an extra 86c, while a bottle of 750ml spirits, including whisky, gin, or vodka, will rise by R5.50.
A packet of 20 cigarettes will be an extra R1,39, while a 23-gram cigar will cost an extra R7.71.
Electronic or e-cigarettes will be taxed in 2021 too.
How does the tax affect the tobacco and alcohol industry?
According to FITA, theoretically, it may seem like an increase in sin taxes is a good idea because it will reduce the number of trauma cases at the hospitals.
But the organization argues that the growing illicit tobacco trade and the increase in taxes will reward non-compliance and pose a more significant threat to job losses.
The increase puts further strain on the alcohol industry, which pays on average R2.5 billion in excise tax each year. The industry called for a halt in implementing the tax, saying it would need more time to recover from the COVID-19 alcohol bans.
Tens of thousands of jobs are on the line due to the increase in sin tax because the alcohol industry remains volatile.
Fita Chairperson Sinenhlanhla Mnguni: