Uncategorized 26.2.2014 06:07 pm

Cigarette tax ‘not enough’

Image courtesy stock.xchnge (mi-sio)

Image courtesy stock.xchnge (mi-sio)

The sin tax increase for tobacco products was not enough to put the youth off smoking, the National Council Against Smoking said on Wednesday.

Finance Minister Pravin Gordhan’s budget earlier increased the excise duties on a pack of 20 cigarettes by 68 percent, from R10.90 to R11.60.

“This modest hike means that the Treasury has once again spurned the opportunity to reduce smoking amongst youth, save lives, and generate revenue,” the council’s executive director Yussuf Saloojee said in a statement.

According to the council, had the increase been R1.20 per pack almost 620 million fewer cigarettes would have been smoked in the next year. This would have generated government revenues of around R500 million, he said.

“The Treasury’s priorities favour business above health, based on the naive assumption that containing cigarette excise tax will contain the illicit trade in cigarettes,” Saloojee said.

The Tobacco Institute of SA (Tisa) said it acknowledged the importance of excise duties on tobacco as an extremely valuable source of income for the fiscus.

Chief executive Francois van der Merwe said in a statement: “We are grateful to Treasury for maintaining the 52 percent tax incidence on tobacco products.”

He said that as tobacco products became more expensive, illicit tobacco operators used the opportunity to avoid paying taxes, which in turn allowed them to sell their illegal products more cheaply.

“An unlevel playing field is created with the legal tobacco sector losing market share and government losing revenue. Only the illicit operators flourish.”

The new excise duties for other types of tobacco products included a nine cent increase per 25g of pipe tobacco, R5.11 per 23g of cigars and 87c per 50g of roll-your-own tobacco.

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