Cigarette and booze makers are getting a R6 billion tax holiday to make up for lockdown
- Staff Writer: Phillip de Wet
The makers of alcoholic drinks and tobacco products are getting their own payment holiday, South Africa's National Treasury announced on Thursday: 90 days extra to pay excise taxes that were due in May and June.
Like payment holidays on consumer debt and other assistance, the deferral is only available to already sin-tax-compliant businesses.
Between them, Treasury expects, they will save some R6 billion that would have been payable to the state over those two months.
"The primary function of these duties and levies is to ensure a constant stream of revenue for the state, with a secondary function of discouraging consumption of certain harmful products; i.e. harmful to human health or to the environment," according to the SA Revenue Service (Sars).
Excise duties – which are also levied on petrol and cosmetics – are imposed at the point of production. But the makers of those products have seen their cashflow disappear thanks to strict lockdown rules that allow no sale of alcoholic drinks or tobacco products.
The deferral of duties will allow such manufacturers to better align their tax payments with their retail sales, Treasury said.
South Africa's market for illegal cigarettes – which avoid taxation entirely – is believed to have exploded during the lockdown period.