In the recent budget speech finance minister Enoch Godongwana announced a 5.5% increase in the excise tax on cigarettes, and a 4.5%-6.5% rise in the excise tax on alcohol. While these tax increases are marginally higher than the inflation rate, they are substantially smaller than last year’s 8% excise tax increases. Sadly, this year’s tax increases are so small that they will have only a limited impact on public health.
Despite sporadic sales bans in the past year, people have clearly been able to stock up their alcohol supplies, which would have delighted the industry. Legal consumption of cigarettes in the 2021/22 financial year is estimated to be 40% less than two years ago. The sad conclusion is that even though the illicit cigarette market is smaller than it was in 2020, it is substantially larger than it was before the start of the pandemic.