The excise tax on a pack of 20 cigarettes increased by a disappointing 68 cents in the national budget. This modest hike means that the Treasury has once again spurned the opportunity to: reduce smoking among the youth, save lives, and generate revenue.
 
The Council favoured a doubling of the announced excise tax increase. A R1.20 per pack increase (i.e., by five percent above the inflation rate) would have resulted in almost 620 million fewer cigarettes being smoked in the country next year and an increase in government revenues of about R500 million.
 
When cigarette prices go up, more young people do not start, more adults quit – so staying healthy – and government income increases. Making cigarettes less affordable is probably the best way of preventing smoking among the youth. 
 
Yet cigarette excise taxes in South Africa – at 52 percent of the retail price – are well below the levels recommended by the World Health Organisation (WHO) and the World Bank.  WHO recommends that taxes should comprise 70 percent of the retail price of cigarettes, and the World Bank that it is between 66 to 80 percent of the retail price. 
 
Despite this, the tax incidence in this country has changed little in the past 14 years. It was set at 50 percent in 1997 and increased to 52 percent in 2004. The reason for this conservatism is clearly tobacco industry influence on policy.
 
The Treasury’s priorities favour business above health, based on the naive assumption that containing cigarette excise tax will contain the illicit trade in cigarettes. Clearly this is not the case. Smuggling has swelled in spite of the Treasury’s ultra-cautious cigarette excise tax policy.
 
By contrast, in the United Kingdom – which has among the highest cigarette taxes in the world and where there are large annual increases in taxes – smuggling has been significantly reduced in the past decade by strong enforcement measures, and smoking among children has declined.
 
The Treasury’s tobacco excise tax policy is both misguided and wrong and in urgent need for review before the next budget.
 
For smokers seeking to reduce the costs of tobacco use to their health and wealth, free assistance in quitting is available from the Quitline, Tel: 011 720 3145011 720 3145.
 
Yussuf Saloojee
National Council Against Smoking 
Mobile: 076 633 5322076 633 5322
Tel: 011 725 1514011 725 1514
 
For more about National Council Against Smoking, refer to www.againstsmoking.co.za