South Africa’s 2025 Budget: Proposed Increases in Excise Duties on Alcohol and Tobacco

The South African government plans a 6.75% increase in alcohol excise duties and a 4.75% rise for tobacco in the 2025/26 budget. Adjustments will take effect from April 1, streamlining administrative processes. Future consultations on alcohol taxation are scheduled, emphasizing public health and regulatory efficiency.

In the upcoming 2025/26 financial year, the South African government plans to adjust excise duties on alcohol and tobacco products beyond the anticipated inflation rate. The National Treasury’s Budget Review indicates a proposed 6.75% increase in excise duties for alcoholic beverages and a 4.75% rise for tobacco products, which includes cigarettes and vaping items. The increase for pipe tobacco and cigars mirrors the alcoholic beverages at 6.75%.

In an effort to streamline administrative processes, future excise duty adjustments will take effect on April 1. Provisions allowing for the management of unusual cigarette clearances around budget announcements, established since 2021, may also be extended. Last November, a discussion paper on the taxation of alcoholic beverages was released for public assessment, proposing a more progressive excise duty structure.

Public consultations regarding the new alcohol excise taxation framework are anticipated in 2025, though final details will follow the 2025 Budget. Notably, the proposed excise rates for various alcoholic beverages are as follows: unfortified wine will rise from R5.57 to R5.95 per litre, fortified wine from R9.40 to R10.04 per litre, and sparkling wine will increase from R17.83 to R19.03 per litre.

Additionally, ciders will experience an uptick from R135.89 to R145.07 per litre of absolute alcohol. Spirits will shift from R274.39 to R292.91 per litre, while cigarette excise duties will increase from R21.77 to R22.81 for 20 cigarettes. Lastly, cigarette tobacco is set to rise from R24.47 to R25.63 for 50g. The government’s adjustments reflect its ongoing commitment to regulate and adapt excise duties effectively, balancing revenue generation with public health considerations.

In summary, South Africa’s 2025 Budget proposes significant increases in excise duties on alcohol and tobacco products, exceeding anticipated inflation. The adjustments aim to enhance regulatory efficiency and adapt the framework for alcohol taxation. Proposed new rates reflect an ongoing commitment to fiscal adjustment, public health, and economic considerations. Public consultations scheduled for 2025 will further engage citizens in this evolving taxation landscape.

Original Source: www.zawya.com