Wednesday, February 15, 2006

Sin Tax

Yesterday was the release of the annual Budget and if you're a beer drinker, then from April 1, 33.6c out of every R1 spent on your favourite beer will end up in government coffers in the form of excise duty.

Wine drinkers contribute excise duty of 21.5c in every R1 spent and spirits drinkers contribute a massive 41.5c in every R1 spent on their favourite tipple. Drinkers will also be paying VAT.

For the beer, wine and spirits section of the sin industry, this year's budget represents the third year of a three-year phase-in period to establish international norms for tax charges. So there were no surprises on this front, although this did not prevent some of the industry players from registering discontent.

SAB communications manager Michael Farr said the company had noted the excise increase of 9 percent on beer. "According to government's stated policy objective of applying an international excise benchmark of 43 percent of the weighted retail selling price for spirits, 33 percent for beer and 23 percent for wine, we calculate that using Nielsen's data, beer is now above the benchmark at 33.6 percent, wine is below at 21.5 percent and spirits are below at 41.5 percent."

But the guys at Distell, a major player in the wine and spirits industry, were hoping for some relief from intense competition on the international front, which is damaging the industry's export efforts.

The 12.5 percent increase in excise duty on wine had been communicated to the industry and so there was no surprise, but there were signs of some unhappiness. The 20 percent hike in duty on sparkling wine was not very easy to swallow.

Distell financial director Merwe Botha acknowledged that the increases were in line with government policy, but added that Distell would have liked to see the standard rate of company tax reduced to 28 percent "to help deal with the more competitive international situation".


At 12:12 AM, Anonymous Anonymous said...

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