National Council Against Smoking Comments on the 2010/11 Budget

Thursday, February 18, 2010 - 13:09
Same old, same old, policy. Another opportunity to promote public health and raise government revenues squandered.
Tobacco taxes – increase not enough

Same old, same old, policy. Another opportunity to promote public health and raise government revenues squandered.

Predictably, the tax on cigarettes increased by a meagre R1,24 per pack in today’s budget. In his first Budget, the Finance Minister has obdurately stuck to a policy which keeps tobacco taxes low and so favours the tobacco companies at the expense of public health and government revenues.

The tax rates on tobacco products in South Africa are amongst the lowest in the world. Since 1997, the government has set the cigarette tax rate at 50% of retail price, which increased marginally to 52 percent in 2002.

In Ireland a packet of 20 cigarettes costs R93 with taxes making up 79 percent of the retail price. The average tax incidence in the 27 member states of the European Union is 78 percent. Predictably, another opportunity to encourage smokers to quit and to increase government revenues has been squandered.

Raising taxes, and therefore the price of tobacco products, is the most effective way to reduce tobacco use, especially amongst the young and the poor. People in these two groups are more price conscious. Higher prices convince them to quit or not start in the first place.

An increase in tobacco tax rates is not only sound public health policy but a good way to boost the economy. Higher taxes reduce tobacco consumption, lower health-care costs, help households save money by reducing tobacco use, and increase government revenues.

The National Council Against Smoking and other health groups have been calling for more than a decade for changes to the countries tobacco tax policy. Tobacco taxes are a healthful and voter-friendly levy. Many smokers welcome the tax as they see it as offering them an incentive to quit their deadly addiction.

Dr Yussuf Saloojee
Executive Director
National Council Against Smoking
Author(s): 
Dr Yussuf Saloojee