Budget 2019:  Well done on tackling illicit trade Minister Mboweni, it’s a pity you didn’t raise tobacco taxes more

Media release                                                                  

 

The National Council Against Smoking welcomes Finance Minister Tito Mboweni’s bold measures to tackle South Africa’s problems with the illicit trade in cigarettes. 

 

Mboweni told South Africa that a new Revenue Service Commissioner would be appointed, the Illicit Economy Unit would be reintroduced, and the capacity and IT challenges at the revenue service would be addressed. These changes, along with the announced new Investigative Directorate in the National Prosecuting Authority, will be crucial in eliminating the illicit trade. 

 

However,we are disappointed by the minister’s insignificant increase of R1.14 in taxes on cigarettes.  This increase is lower than last year’s increase of R1.22 per packet.  

 

The increase brings the excise tax to R16.66 per packet. People who smoke on average nine cigarettes a day will only spend an additional R187.24 for the year. This is not enough to make people think twice about their smoking behaviour. 

 

“We are encouraged by Minister Mboweni’s bold approach to the illicit trade. It shows that National Treasury takes the challenge very seriously,” said National Council Against Smoking Executive Director Savera Kalideen. 

 

She added: “It would have been better if these steps were accompanied by a larger tobacco tax increase as this would have helped offset the cost of tobacco-related harm, currently R59 billion per annum.  

 

“Instead, the health budget increased from R205 billion in 2018 to over R222 billion this year, meaning that the state continues to spend on providing treatment for illnesses instead of also taking measures to prevent or reduce disease,” she said.

 

Excise tax increases prevent tobacco-related disease and disability by making cigarettes more expensive and less affordable. As a result, smokers either cut down or stop completely. This is an imperative approach to take in South Africa where about 20% of people aged 15 and above -- or nearly 8 million people – smoke. 

 

Last year’s increase of R1.22 meant that there would have been 12 million fewer packets of cigarettes consumed over the year, which would have brought in an extra R102.5 million into state coffers. 

 

However, since the excise taxes are lower this year, we can expect to see more packets of cigarettes consumed this year, but bringing in less revenue than in 2018. 

 

A loss to public health and a loss to public finances!

 

For further information, contact:

NCAS Executive Director: Savera Kalideen

saverak@iafrica.com

0712270939 or 011 7251514

 

 

 

 

 

 

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