Finance Minister Tito Mboweni delivered his 2021 Budget today, which included significant tax increases on alcohol and tobacco products.
Mboweni said it is clear that excessive alcohol consumption can lead to negative social and health outcomes.
“Consumers do react to price increases, and higher prices should lead to lower consumption of alcohol products with positive spinoffs,” he said.
The Finance Minister subsequently announced an 8% increase in the excise duties on alcohol and tobacco products.
What this means, in real terms, is that from today:
- A 340ml can of beer or cider will cost an extra 14c.
- A 750ml bottle of wine will cost an extra 26c.
- A 750ml bottle of sparkling wine an extra 86c.
- A bottle of 750 ml spirits, including whisky, gin or vodka, will increase by R5.50.
- A packet of 20 cigarettes will be an extra R1.39c.
- 25 grams of piped tobacco will cost an extra 47c.
- A 23-gram cigar will be R7.71 more expensive.
Fuel levies will also be increased by 27 cents per litre, comprising 15 cents per litre for the general fuel levy, 11 cents per litre for the Road Accident Fund levy and 1 cent per litre for the carbon fuel levy.
It was, however, not only doom and gloom. The personal income tax brackets will be increased by 5%, which is more than inflation.
This will provide R2.2 billion in tax relief. Most of that relief will reduce the tax burden on the lower and middle-income households.
This means that if you are earning above the new tax-free threshold of R87,300, you will have at least an extra R756 in your pocket after 1 March 2021.
Further good news is that the corporate income tax rate will be lowered to 27% for companies with years of assessment commencing on or after 1 April 2022.
This will be done alongside a broadening of the corporate income tax base by limiting interest deductions and assessed losses.
“We will give consideration to further rate decreases to make our tax system more attractive,” Mboweni said.
Budget 2021 Highlights
The document embedded below outlines the major changes announced in the 2021 Budget Speech.