CIGARETTES, BOOZE TO COST MORE, NO FUEL LEVY IN SA

MBABANE – Smokers will pay an extra E1.03 for a packet of cigarettes.

In his televised budget speech yesterday, South Africa’s Finance Minister Enoch Godongwana, announced that smokers and drinkers would have to pay extra on ‘sin’ taxes. Eswatini is an importer of most tobacco products and alcoholic drinks, mainly ciders and wines. In his maiden speech broadcast on South Africa’s main television stations that include eNCA, Minister Godongwana announced that excise duties on alcohol and tobacco would increase by between 4.5 and 6.5 per cent. As a result, from yesterday, a 340ml can of beer or cider would cost 11 cents more.

Expensive

A 750ml bottle of wine will be 17 cents more expensive. Sparkling wine drinkers are also not off the hook, as they are paying an additional 76 cents. A bottle of spirits will be E4.83 more expensive while a packet of cigarettes will cost an additional E1.03.  Another hike saw 25 grams of piped tobacco costing an extra 37 cents.  A 23 gram cigar will be E6.77 more expensive. Meanwhile, for the first time since 1990, South Africa’s National Treasury decided not to increase the fuel levy and Road Accident Fund (RAF) levy that contribute to the hefty costs of petrol and diesel. Eswatini is a net importer of fuel products. Data on imports for Eswatini in the past month, indicated that invoices for the importation of energy products amounted to E350.4 million.

An increase in the levy would have been a double blow for Eswatini, as Minister of Finance Neal Rijkenberg, in his budget speech last week announced an additional 30 cents fuel tax that he intended to table with the Fuel Tax Bill. “To provide some relief to households, no increases will be made to the general fuel levy on petrol and diesel for 2022/23. This will provide a tax relief of R3.5 billion to South Africans,” said Godongwana. Meanwhile, there were some similarities in Ministers Neal and Godongwana’s speeches, and they were headlined by a company or corporate tax cut.  The South African minister who stepped into resigned Tito Mboweni’s shoes, said the corporate income tax rate would in future reduce to 27 per cent from 28 per cent alongside ‘base broadening measures’.

Minister Rijkenberg, on the other hand, said Eswatini was reducing corporate tax from 27.5 to 25 per cent. There was also an almost similar relief in terms taxes. While the beneficiaries were low earners here in Eswatini, middle income earners in the neighbouring country will benefit from an adjustment in the income tax brackets. This will see the annual tax free threshold for persons under the age of 64 increasing to E91 250. Minister Rijkenberg lifted the tax brackets, leaving more cash in people’s pockets earning less than E250 000 per year. Individuals will now only start paying tax from E4 000 per month instead of E3 500 per month. “Households and businesses are still under financial pressure and are coping with higher obligations, the effects of COVID-19 and increased fuel prices. Now is not the time to increase taxes and put the recovery at risk. Accordingly, we have decided to keep money in the pockets of South Africans,” Godongwana said.

Relief

South Africa’s budget also included E5.2 billion in tax relief, to help support the economic recovery; provide some respite from fuel tax increases; and boost incentives for youth employment. Notably, South Africa’s budget speech was delivered after Eswatini’s for the first time in a long time. In reaction to this development, Business Eswatini CEO Nathi Dlamini, said the Government of Eswatini delivered a speech that is independent of South Africa and one which is responsive to the country’s very own socio-economic situation as a country.
  A local economist, on condition of anonymity, said his take from the South African budget speech was the freeze in tax hikes; saying Eswatini needed to review the proposal to increase tax for rich individuals. Minister Rijkenberg announced a proposal to lift the upper tax bracket from 33 to 36 per cent. This would affect those earning more than E300 000 per year.

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