Finance Minister Enoch Godongwana on Wednesday announced fresh tax adjustments to raise revenue and reduce the budget deficit.
Alcohol and tobacco taxes, collectively known as ‘sin taxes’, were hit with above inflation increases in the last two budgets.
In the third and likely final, budget for the year, Godongwana maintained those increases, proposing a 6.8% hike for alcohol and 4.8% for tobacco products.
However, the sugar tax was left unchanged for 2025.
While not regarded as a sin tax per se – rather put under the “health promotion levy” – the sugar tax was introduced in 2018 specifically to cut back sugar content in South African food products.
It is also a key ingredient in many alcoholic beverages, and contributes to the price structure.
Alcohol and tobacco (‘Sin taxes’)
- Alcohol excise duties up by 6.8%
- Affects: Malt beer, wine, ciders, spirits, alcoholic fruit beverages
- Traditional African beer & powder: Exempt
- Tobacco excise duties up by 4.75%
- Includes: Cigarettes, vapes (HTPs), cigarette and pipe tobacco, cigars
These increases are above inflation, with alcohol facing a real increase of 2.67% and tobacco 0.67%, based on projected 2025 inflation of 4.08%.
Expected revenue boost from sin taxes:
- R1.30 billion in 2025/26
- R1.37 billion in 2026/27
- R1.46 billion in 2027/28
Alcohol
| Product | New rate | % Increase (Nominal) | Real Increase |
|---|---|---|---|
| Malt beer | R145.07/l absolute alcohol (R0.43/can) | 6.75% | 2.67% |
| Unfortified wine | R5.95/litre | 6.75% | 2.67% |
| Fortified wine | R10.04/litre | 6.75% | 2.67% |
| Sparkling wine | R19.03/litre | 6.75% | 2.67% |
| Ciders & alcoholic fruit beverages | R145.07/l absolute alcohol | 6.75% | 2.67% |
| Spirits | R292.91/l absolute alcohol (R94.46/750ml) | 6.75% | 2.67% |
| Traditional African beer | No change (7.82c/litre) | 0.00% | -4.08% |
| Traditional African beer powder | No change (34.70c/kg) | 0.00% | -4.08% |
Tobacco products
| Product | New Rate | % Increase (Nominal) | Real Increase |
|---|---|---|---|
| Cigarettes | R22.81 / 20s | 4.75% | 0.67% |
| HTPs (Heated Tobacco) | R17.10 / 20s | 4.75% | 0.67% |
| Cigarette tobacco | R25.63 / 50g | 4.75% | 0.67% |
| Pipe tobacco | R8.03 / 25g | 6.75% | 2.67% |
| Cigars | R131.20 / 23g | 4.75% | 0.67% |
| ENDS (e-cigarettes) | R3.18 / ml | 4.75% | 0.67% |
Sugar Tax (Health Promotion Levy)
- No increase in 2025
- Originally scheduled for an inflationary hike on 1 April
- Frozen to give the sugar industry time to restructure in response to regional competition
- Industry groups welcomed the decision
Fuel Levy Increases (Effective 4 June 2025)
- Petrol: +16c/l → New general fuel levy: R4.01/l
- Diesel: +15c/l → New general fuel levy: R3.85/l
- Personal Income Tax
- Brackets not adjusted for inflation again
- This “fiscal drag” is expected to raise R15.5 billion in 2025/26
- Seen as a silent tax increase on middle-income earners
Background: Budget pressures
- Government walked back VAT increases due to GNU divisions
- Originally proposed jump to 17%, then to 16% by 2026
- Failure to raise VAT forced Treasury to lean on other tax sources, especially “sin taxes” and income bracket freezes
Overall, are you happy – or upset – at the Budget?
Let us know by leaving a comment below, or send a WhatsApp to 060 011 021 1
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