Tobacco tax expected to increase by 59c
Smokers can expect to have thinner wallets as the excise tax on cigarettes is expected to increase by 59 cents after next week’s budget announcement, according to the National Council Against Smoking (NCAS).
NCAS has accurately predicted the increase in cigarettes excise taxes before the last two budgets and is confident that Finance Minister Pravin Gordhan will again increase the cigarette excise duty next week.
While supportive of a tax hike, NCAS believes an increase of R1.20 per pack of cigarettes would be much more effective in curbing smoking.
“The increase in excise serves several purposes,” says NCAS Executive Director Dr. Yussuf Saloojee. “It will deter young people from taking up smoking, benefit health and increase government revenues.”
He says that increasing excise tax is the single most effective way for government to reduce premature death and disease caused by tobacco. Cigarettes kill more than 44 000 South Africans every year.
“Customers react to prices and not taxes, and it is the industry itself which is aggressively driving up prices,” Saloojee says. “For several years now, about half of the total price increase was due to the manufacturers increasing prices.”
“For instance, in the 2013 Budget the duty on cigarettes went up by 60 cents, but the recommended retail price of a pack of Peter Stuyvesant went up by R1.50,” he tells Health-e.
Saloojee expects the tobacco industry to complain about the price hike and argue that it will increase the illicit trade in tobacco. He says this claim is false.
“The industry is not opposed to price increases per se, it just wants to keep the money for itself and not share it with government, which pays the hospital bills,” he says.
Saloojee argues that United Kingdom, home to the world’s highest cigarette taxes and largest annual increasess in prices, has reduced the trade in illegal cigarettes through stronger enforcement measues.– Health-e News Service.
Who is to blame for South Africa’s flourishing illegal cigarette trade? Read what Health-e’s Wilma Stassen has to say. Wilma is Health-e’s dedicated non-communicable diseases reporter.