Back Back

Consumer articles


The costly long-term risk of sin-taxed products

25 Feb 2019

Economists and consumers eagerly awaited Tito Mboweni's budget speech. While some of the announcement took consumers and economists by surprise, the fact that sin taxes increased again was expected.

Why government places such heavy taxes on these risky products

SARS increases these duties and levies for two reasons. The first is to increase revenue streams into state coffers and the second is to discourage the use of these harmful products.

Smoking remains a leading cause of premature, preventable death in South Africa. According to the Cancer Association of South Africa tobacco kills 44 000 South Africans every year, which is three times more than motor car accidents, and six million worldwide.

The 2017 Western Cape alcohol-related harms reduction policy white paper says that the financial cost of alcohol-related harms to the economy was estimated at a net loss of between R165 billion and R236bn.

Liberty's Chief Medical Officer, Dr Dominique Stott says, "The reality is smokers and drinkers are at higher risk of contracting life altering illnesses like lung cancer and heart disease."

Consumers without any medical aid to pay for the expensive medical treatments have no choice turn to government for their medical care.

Sin tax increases 2015 to 2019

2015

  • 82 cents more per packet of cigarettes
  • 15c more per litre of wine, 15.5c for beer and R3.77 for spirits

2016

  • 81c more per packet of cigarettes
  • 24c more for wine, 11c more for beer and R3.94c more for spirits

2017

  • R1.06 more per packet of cigarettes
  • 30c more for wine, 11c more for beer and R4.43 more for spirits

2018

  • The price for a packet of cigarettes increased 8.5%, with the taxes increasing from R14.30 per pack of 20 to R15.52
  • Drinkers paid 8.5% more for wine, 10% more for beer and 8.5%  more for whiskey and brandy

2019

  • Smokers will pay R16.66 more per packet of cigarettes
  • Drinkers will pay 84c more for wine, 12 cents more for beer and 1.14 cents more for spirits

Even long-term insurers charge add a premium for alcohol and tobacco consumption

Long-term insurers load the insurance premiums of smokers because they are at a higher risk of contracting severe life-style related illnesses. The price difference in premium rates varies due to a range of factors. However, smokers could pay nearly twice as much as non-smokers.

Clients who smoke are offered smoker-related rates at inception of their policies, but the option exists to change to non-smoker rates at a later stage if the client quits smoking. There is no telling by how much sin tax will increase in future. But one thing is certain – if you continue to smoke and drink, you'll end up paying for it.

So, if you've been thinking about changing your lifestyle by eliminating your vices, perhaps now is the best time to do it. It will make a difference in your health and lifestyle as well as your financial well-being.

ENDS.

For media queries contact:

Zolani Mtshali

Media Relations Specialist

Liberty

Zolani.mtshali@liberty.co.za

011 408 1940 / 082 955 5610


Xola Duze

Brand PR Specialist

Liberty

xola.duze@liberty.co.za

011 408 2501 / 072 601 6291

About Liberty

Liberty is an established and growing Pan-African financial services group, with a presence in 18 countries. It offers an extensive, market-leading range of products and services to help retail and corporate customers build and protect their wealth and lifestyle. These include life and health related insurance; financial support for retirement; and investment management provided through its sub-brand STANLIB. Liberty is part of the Standard Bank Group, which has a 53.6% stake, and has been operational for nearly 60 years. Liberty Holdings is listed on the Johannesburg Stock Exchange as well as the Nairobi Stock Exchange in Kenya.


Also in this section
​​​



​​​​
 
Liberty Group Limited (Reg. no 1957/002788/06) is a registered Long Term Insurer and an Authorised Financial Services Provider (FAIS no 2409).

​​​