Budget Speech 2020: 'Hubbly bubbly' to be taxed, steep hikes for cigarettes and alcohol
CAPE TOWN – While Finance Minister Tito Mboweni announced some real income tax relief, there was no such luck for others, particularly fans of the "hubbly bubbly or hookah pipe", despite repeated calls for relief from this sector.
When delivering the 2020 National Budget Policy Statement, Mboweni said in line with Department of Health policy the government would start taxing heated tobacco products such as hookah or "hubbly bubbly". “The rate will be set at 75 per cent of the rate of cigarettes. Electronic cigarettes, or so-called vapes, will be taxed from 2021.”
The Minister said there would be a renewed focus on illicit and criminal activity, including noncompliance by some religious public benefit organisations.
“Religious bodies must operate within the strict boundaries of the law if they are to enjoy tax exempt status. The annual tax free savings account contribution limit rises to R36 000,” he said.
Mboweni also announced increased excise duties “to keep pace with inflation” from today:
- A 340ml can of beer or cider will cost only an extra 8c
- A 750ml bottle of wine will cost an extra 14c
- A 750ml bottle of sparkling wine an extra 61c
- A bottle of 750 ml spirits, including whisky, gin or vodka, will rise by R2.89
- A packet of 20 cigarettes will be an extra 74c
- A 25 gram of piped tobacco will cost 40c more
- A 23 gram cigar will cost an extra R6.73
I am again happy to report that there is no increase in the price of sorghum beer.
To adjust for inflation, the fuel levy goes up by 25 cents per litre, of which 16 cents is for the general fuel levy and 9 cents is for the Road Accident Fund levy.
“Despite this increase, the liabilities of the RAF are forecast to exceed R600 billion by 2022/23. We need to take urgent steps to reduce this risk to the fiscus and bring about a more equitable way of sharing these costs. One option is to introduce compulsory third-party insurance.
“The carbon tax and other measures will help green the economy, and will bring in R1.75 billion over the next few months. This will be complemented by more focussed spending on climate change mitigation,” said Mboweni.
The minister said the government remained extremely concerned about plastic bags throughout the length and breadth of the country and increased the plastic bag levy to 25 cents.