Sin taxes adjusted above the expected inflation rate

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According to the 2025 National Treasury Budget Review document, government is proposing to increase excise duties on alcoholic beverages by 6.75%, while the tobacco excise duties are expected to increase by 4.75% for cigarettes, cigarette tobacco, and electronic nicotine and non-nicotine delivery systems (“vaping”).

The proposed increase for pipe tobacco and cigars is 6.75%.

“To ease the administrative burden of implementing adjustments on Budget Day, in future years, adjustments to excise duties will take effect from 1 April. Legislative provisions to deal with unusual clearances of cigarettes around Budget announcements have been in place since 2021 and may be extended,” National Treasury said.

Last November, government published a discussion paper, The Taxation of Alcoholic Beverages, for public comment.

“It proposes adjustments to the alcohol excise taxation policy framework, including the introduction of a three-tier progressive excise duty rate structure for wine and beer. Government will hold public consultations on the new excise framework during 2025.

“Considering that the details of the new alcohol excise taxation framework will be finalised only after the 2025 Budget, government has proposed to increase excise duties on alcoholic beverages by 6.75% for 2025/26,” National Treasury said.

Changes in specific excise duties for the 2025/26 financial year are as follows:

• Unfortified wine is currently at R5.57 / litre and the proposed excise duty rate is R5.95 / litre.
  
• Fortified wine is currently at R9.40 / litre and the proposed excise duty rate is R10.04 / litre.
  
• Sparkling wine is currently at R17.83 / litre and the proposed excise duty rate is R19.03 / litre.
  
• Ciders and alcoholic fruit beverages are currently at R135.89 / litre of absolute alcohol (231.02c / average 340ml can) and the proposed excise duty rate is R145.07 / litre of absolute alcohol (246.61c / average 340ml can).
  
• Spirits are currently at R274.39 / litre of absolute alcohol (R88.49 / 750ml bottle) and the proposed excise duty rate is R292.91 / litre of absolute alcohol (R94.46 / 750ml bottle).
  
• Cigarettes are currently at R21.77 / 20 cigarettes and the proposed excise duty rate is R22.81 / 20 cigarettes.
  
• Cigarette tobacco is currently at R24.47 / 50g and the proposed excise duty rate is R25.63 / 50g.