SMOKERS and drinkers will have to cough up more money to enjoy their habits from April.
Delivering the annual national budget speech today (Wednesday), Finance Minister Pravin Gordhan said taxes on tobacco purchases will be spiked by 68 cents per packet of 20 cigarettes in April.
A 340ml can of beer will go up by nine cents duty increase and by R4.80 for a bottle of spirits.
While fuel is already at its record high at R13.59 a litre for 95-octane unleaded petrol, motorists will have to dig even deeper into their pockets for a petrol increase of 20 cents on 2 April.
Fuel levies will be driven up by 12 cents with 8 cents channelled towards the Road Accident Fund.
According to Foskor Tax and Treasury Group Manager Sthe Mzobe, these indirect tax increases and fuel inflations will ultimately cause retail prices to soar, forcing consumers to inevitably tighten their belts.
‘It becomes more expensive for businesses to procure products and consumer spending slows down due to unaffordable retail goods,’ said Mzobe.
But the Zululand Chamber of Commerce and Industry (ZCCI) said it is not all bad news as higher sin taxes could boost infrastructure development to attract more investors and alleviate the high unemployment rate.
‘Sin tax contributes a great deal to SARS’ revenue stream and ultimately to the country’s budget,’ said ZCCI Immediate Past President (IPP) Thula Mkhwanazi.
‘Furthermore, sin tax ensures the government has more funds to spend on infrastructure and other public works programmes.’
Aside from adding resources to government coffers, Head of Department of the Economic Faculty at the University of Zululand Dr Irrshad Kaseeram adds that it serves as an incentive for Zululanders to quit bad habits.
Indirect taxes, including value added tax (VAT) is currently the biggest contributor to the fiscus.
In the 2012/13 tax year, 46.2% of the revenue was from indirect taxes compared to 19.8% Corporate Tax and 34% Personal Tax.
