South Africans will soon feel a sharper sting at the till when buying alcohol and cigarettes after Finance Minister Enoch Godongwana unveiled another round of steep excise duty hikes in his latest budget speech. However, the sugar tax – often considered just as controversial – has been left untouched, at least for now.
In what could be his final budget presentation for the year, Godongwana announced that taxes on alcoholic drinks will rise by 6.8%, while tobacco products will go up by 4.8%. According to BusinessTech, the increases are above the current inflation rate, which hovers just above 4%, and mark the third consecutive budget cycle where so-called ‘sin taxes’ have been given a boost.
Despite this, sugary products have escaped the axe once again. The health promotion levy, better known as the sugar tax, will remain unchanged going into 2025. While not technically grouped with sin taxes, the sugar levy was introduced in 2018 to help reduce the amount of sugar in processed foods and beverages and has become a staple contributor to the Treasury’s revenue over the years.
Originally, the levy was expected to rise in line with inflation from 1 April 2025. But in a move already flagged in March, the Treasury decided to postpone any increase, citing pressure on the domestic sugar industry and increased competition from imported products in the Southern African region. This decision was welcomed by local sugar producers, who had warned that additional costs could hurt jobs and hamper restructuring efforts already underway in the sector.
Meanwhile, alcohol consumers will bear the brunt of the new excise structure. Everything from beer and wine to ciders, spirits and even alcoholic fruit beverages will be affected. However, traditional African beer and its powdered counterpart were spared, remaining tax-exempt in a nod to cultural preservation and affordability for lower-income consumers.
Tobacco products weren’t spared. Cigarettes, cigars, pipe tobacco, and heated tobacco products (HTPs), such as vapes, will all see an average increase of 4.75%. In real terms, this amounts to a 0.67% increase when compared to inflation, while the alcohol category faces a real increase of nearly 2.7%.
The revised sin tax rates are projected to bring in an additional R1.3 billion during the 2025/26 financial year. That number is expected to climb to R1.46 billion by 2027/28, offering the government a dependable – albeit controversial – revenue stream during a period of fiscal strain.
National Treasury has been under mounting pressure to plug a widening deficit, especially after its proposal to raise VAT sparked deep divisions within the Government of National Unity (GNU). Earlier this year, Godongwana’s attempt to hike VAT to 17% was met with such resistance that he reportedly didn’t even make it to the podium for the announcement.
Instead, a revised plan was later introduced, proposing a more staggered approach – raising VAT to 16% through two half-percent increases by 2026. But with resistance still strong, the Treasury has turned to more politically palatable options, such as sin taxes and fuel levies.
As of 4 June 2025, South Africans can also expect to pay more at the pumps. The general fuel levy will increase to R4.01 per litre for petrol and R3.85 per litre for diesel. These hikes equate to a 16-cent and 15-cent per litre increase, respectively.
In addition to these levies, the government has again opted not to adjust personal income tax brackets in line with inflation, effectively pulling more earners into higher tax brackets – a move expected to generate R15.5 billion in 2025/26 alone.
With consumers already grappling with rising costs across the board, these changes are likely to impact household budgets even further. While the sugar tax freeze provides temporary relief, it’s clear the government is tightening every other screw it can to boost revenue and stabilise the country’s fragile finances.
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