More tax for beer, cigarettes

Wednesday, February 26, 2014

 

Cape Town – If you have been planning to quit smoking, this is probably the best time to do that. Smokers will from now on pay roughly 68 cents more for a packet of cigarettes.

Finance Minister Pravin Gordhan on Wednesday once again announced an increase in the so-called ‘sin taxes’  and hit consumers of alcohol and cigarette smokers where it hurts the most – in their pocket.

A 340ml can of beer will cost 9 cents more, while a bottle of whiskey will go up by nearly R5. The increases take effect immediately. 

The general fuel levy will be limited to the inflation-related 12 cents per litre from 2 April and the Road Accident Fund levy will increase by 8 cents.

But, there was also good news coming out of Minister Gordhan’s speech. The Finance Minister announced a personal income tax relief of R9.25 billion and 40% of the relief goes to South Africans earning below R250 000 per year.

In the past five years, the tax register of individuals grew from 5.5 million to over 15 million to include all known economically active individuals. Companies on the tax register now stand at more than 2.3 million.

Minister Gordhan said an increase in the tax-free lump sum amount paid out of retirement funds from R315 000 to R500 000 has also been proposed. It will benefit lower income people who did not benefit from deductible contributions.  

In a bid to encourage households to save, Minister Gordhan said legislation to allow for tax-exempt savings accounts will proceed this year.

“Complimenting this tax reform, a new top-up retail savings bond will be introduced by the Treasury this year, allowing for regular deposits into a government retail bond. It will also be accessible to community savings groups such as stokvels,” Minister Gordhan said.

He announced that the requirement from the Income Tax Act, which compels philanthropic foundations to distribute 75% of the money they generate within a year, will be relaxed.  The regulations will still ensure that accumulated capital is distributed to worthy causes within a reasonable period.

Carbon tax delayed

Minister Gordhan also said the mooted carbon tax has been delayed and will not be implemented in 2016. He said this was done to allow for further consultation on the proposed tax. – SAnews.gov.za