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MBABANE – The prices of cigarettes, spirits and wines are expected to rise if South Africa’s budget proposal gets the green light.

Eswatini is an importer of most tobacco products and alcoholic drinks, mainly ciders and wines.

SA Finance Minister Enoch Godongwana proposed an increase in the excise duties on alcohol and tobacco of 4.9 per cent, in line with expected inflation.

He announced that taxes on cigarettes and alcohol would be raised in 2023.

He said there were no major tax developments for 2023, on the budget’s revenue side.

Godongwana announced that the revenue collection for 2022/2024 was expected to reach R1.69 trillion, exceeding the 2022 budget by an estimated R93.7 billion. (The Rand is pegged to Emalangeni)

This means that the duty on a 340 millilitre (ml) can of beer increases by 10 cents, A 750ml bottle of wine goes up by 18 cents, a 750ml bottle of spirits will increase by R3.90, a 23 gram cigar by R5.47 and a pack of 20 cigarettes, the duty rises 98 cents.

Imminent

These listed items are mostly imported from SA, implying that an adjustment to local prices was imminent.

In Eswatini, the private sector is dominated by trade which continues to be a challenge on international level.

Minister of Finance Neal Rijkenberg, in the recent quarterly report said government had been running persistent fiscal deficits in the recent past financial year 2022/2023.

He said this was a result of volatile

SACU receipts causing large swings in revenue collection, coupled with inadequate response in government expenditure controls.

In this financial year, SACU receipts declined from E6.38 billion in 2021/22 to E5.82 billion in 2022/23, which is equivalent to 8.88 per cent in the current year.

Worth noting, the South African Government last year announced that excise duties on alcohol and tobacco would increase by between 4.5 and 6.5 per cent. As a result, from yesterday, a 340ml can of beer or cider would cost 11 cents more.

He said in the 2023/24 financial year, SACU was expected to grow by 67.2 per cent to E9.66 billion from E5.8 billion, followed by E7.09 billion in 2024/25 and E7.12 billion in 2025/26, assuming some of the SACU receipts were put in the proposed SACU Stabilisation Fund.

“In tandem to that, total domestic tax collection is expected to increase over the medium-term by an average six per cent, amounting to E12.98 billion in 2023/24, followed by E14.95 billion in 2024/25 and E14.81 billion in 2025/26,” Rijkenberg said.

The minister exclusively mentioned that the projected increase in domestic revenue collection in the medium-term was largely attributed to a number of proposed revenue measures forming part of the efficiency gains and favourable economic growth.

He said government was working tirelessly to ensure that revenue enhancement reforms were put into place.

The strategy includes the establishment of the SACU Stabilisation Fund, wherein draft regulations were already with the attorney general.