Tito Mboweni has, rather reluctantly, had to play the pantomime villain on Wednesday, as he delivered his mid-term budget speech to Parliament. The finance minister has been confronted by the multi-billion rand devastation wreaked by the pandemic. But, for now, he will resist the temptation to hike taxes on tobacco and alcohol.
No tax increase for tobacco and alcohol – but when might that change?
Mboweni gave South African citizens some worrying news regarding taxes, saying that in order to replenish under-collecting Treasury’s coffers, taxes will increase by R5 billion in the next financial year (2021), with further increases to follow until 2024/25. The eventual total of increased tax revenue may reach R40 billion.
That means that details of further tax measures – such as increases on existing policies or the introduction of new revenue collection schemes – will only be announced in the February 2021 Budget. For the next four months at least, alcohol and tobacco will remain untouched by the taxman: Heaven knows what state Tito’s Aloe Ferox plant will be in by then…
A reprieve for smokers and drinkers
At the start of the pandemic, both booze and cigarettes were pulled from the shelves. Just as it like looked tobacco would return to stores at the end of April, Nkosazana Dlamini-Zuma made her now-infamous intervention and confirmed that the prohibition of smokes was being extended. Ciggies didn’t return to supermarkets until late August.
Meanwhile, liquor sales went through a similarly tricky patch. The intoxicant goods were first banned for 70 days, before going back on sale on 1 June. However, a further 35-day restriction was placed on alcohol – before it made another triumphant return along with tobacco. The misery was not compounded by the minister on Wednesday.
While ciggies were banned in South Africa, illegal vendors thrived. Having established a strong presence in this country since the start of lockdown, the tax-dodging businesses are allegedly ‘well-prepared’ to exploit any future tax increases.
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