Budget 2021: Good news on income tax, bad news on booze, smokes and fuel

The main tax proposals for 2021/22 are:

• An above-inflation increase of 5% in personal income tax brackets and rebates.
• An inflation-linked general fuel levy increase of 15c/litre for petrol and diesel, and an above-inflation increase of 11c/litre for the Road Accident Fund levy.
• An 8% increase in alcohol and tobacco excise duties.
• Drinkers and smokers will be paying 8% more for their goods.

The country’s boozers should expect to pay R5.50 more for a bottle of whiskey while smokers will fork out an extra R1.39 for a pack of cigarettes.

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In the 2021 budget review by the National Treasury and Finance Minister Tito Mboweni, excise duties have again been increased above the inflation rate with the aim of increasing taxes from alcohol to boost revenue.

Customs and excise duties is projected to generate R100.5 billion in tax revenue in the 2021/22 financial year.

Alcohol

While booze was banned on-and-off during the lockdown, increasing alcohol tax was a measure recognised by the World Health Organisation to reduce overall drinking which directly impacts health.

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“In South Africa, studies have shown the harm generated by alcohol in society and the effect on public health when alcohol sales were restricted.”

“Government will increase excise duties on alcohol by 8% for 2021/22. The excise incidence will move further above the policy guidelines for each category,” the budget review said.

How much will drinking cost me?

• Malt beer – 14 cents per 340ml can
• Fortified wine – 44 cents per 750ml bottle
• Unfortified wine – 26 cents per 750ml bottle
• Sparkling wine – 86 cents per 750ml bottle
• Ciders and alcohol fruit beverages – 14 cents per 340ml can
• Spirits – R5.50 per 750ml bottle

Tobacco tax

According to the World Health Organisation, cigarettes in South Africa were increasingly affordable, being more affordable in 2018 than in 2008.

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But an 8% increase in tobacco products will be introduced and will affect consumers’ pockets in the following way:

• Cigarettes – R1.39 per packet of 20
• Cigarette tobacco – R1.57 per 50g
• Pipe tobacco – 47 cents per 25g
• Cigars – R7.71 per 23g.

The policy framework for both alcohol and tobacco will be reviewed during the 2021/22 financial year.

Heated tobacco and electric cigarettes

After the introduction on excise duty for heated tobacco products in the 2020 budget, these will be differentiated by product type.

Products that are normally sold in packs of 10 or 20 sticks will be taxed accordingly while other products will be taxed by weight.

“The National treasury will soon publish a discussion paper on proposals to tax electronic nicotine and non-nicotine delivery systems. An excise duty will be introduced later this year, following public consultations.”

Personal Income Tax

The personal income tax brackets and rebates will increase by 5% to provide relief to households by not increasing the individual tax burden.

“Personal income tax collection has been affected by rising job losses and lower earnings for those who are employed.”

“Personal income tax collections remain under pressure due to the elevated levels of unemployment flowing from the pandemic.”

Fuel levy

Fuel levy will be increased as per inflation to 15 cents per litre of petrol and diesel and will go up above inflation of 11 cents per litre in the Road Accident Fund Levy.

The proposed levy increases will be effective from 7 April 2021.

Fuel levy will increase as follows:

• R3.85 per litre of petrol
• R3.70 per litre of diesel
• R2.18 per litre of both petrol and diesel for the Road Accident Fund levy

rorisangk@citizen.co.za

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