As is the case each year, Government proposes an increase in duties and levies for excisable products in Schedule 1 Part 2A to the Customs and Excise Act 91 of 1964 (Customs Act).
Of relevance this year are the following:
Tobacco and alcohol (excluding traditional African beer)
- The targeted excise tax burdens for wine, beer and spirits are 11%, 23% and 36% of the weighted average retail price, respectively. Government proposes to increase excise duties on alcohol by between 4,5% and 6,5% for 2022/23.
- The targeted excise tax burden as a percentage of the retail selling price of the most popular brand within each tobacco product category is currently 40%. The consumption of cigars has moved towards more expensive brands, requiring a higher-than-inflation increase to maintain the targeted tax burden. Government proposes to increase the excise duty rate by between 5,5% and 6,5%.
- The policy framework for both alcohol and tobacco will be reviewed during 2021/2022.
Traditional African beer
- As was the case last year, there will be no change to the excise duty on traditional African beer.
- The current excise duty regime applies a flat excise rate for traditional African beer powder of 34.7c/kg.
- As there are similar products in the market, in the interest of equity these products will be included in the tax net with an excise equivalent to the powder rate from 1 October 2022.
- Following public consultation, Government proposes to apply a flat excise duty rate of at least R2,90/ml to both nicotine and non-nicotine solutions.
- The proposal will be included in the 2022 Taxation Laws Amendment Bill for further consultation before being introduced from 1 January 2023.
Health Promotion Levy
The health promotion levy for beverages with more than 4g of sugar content per 100ml will be increased from 2,21c/g to 2,31c/g from 1 April 2022.
Consultations will also be initiated to consider lowering the 4g threshold and extending the levy to fruit juices.
For the first time, fuel prices in South Africa exceeded R20/l for inland unleaded petrol in December 2021 due to higher crude oil prices and exchange rate depreciation. To support consumers and the economic recovery, no increases will be made to the general fuel levy on petrol and diesel for 2022/23, providing tax relief of R3,5 billion. There will also be no increase in the Road Accident Fund (RAF) levy.
The last time the fuel price was not increased due to a change in either the general fuel levy or the RAF levy was in 1990.
Plastic Bag Levy
To further discourage consumers from buying plastic bags, and to support reuse and recycling, it is proposed that the plastic bag levy be increased from 25c/bag to 28c/bag, in line with inflation, from 1 April 2022.
Government aims to reduce single-use plastics. An upstream plastic tax and a tax on single-use plastics will be investigated.
Motor Vehicle Emissions and Incandescent Globe Taxes
Government proposes to:
- Increase the vehicle emissions tax rate on passenger cars from R120 to R132/gCO2/km;
- Increase the tax on double cabs from R160 to R176/gCO2/km from 1 April 2022; and
- The incandescent light bulb levy will be increased from R10 to R15 per light bulb from 1 April 2022.
Government states that:
- The rebuilding of the South African Revenue Service (SARS) is evident in improved revenue collection and compliance trends. Over the past year, SARS has recruited an additional 490 staff across various levels and skills areas and has invested R430 million in refreshing and modernising its information and communications technology infrastructure.
- The multi-year customs modernisation programme is under way, with an initial focus on improving Beitbridge border operations through data-driven risk profiling and number plate recognition. SARS will expand the modernisation programme to other ports of entry over the medium term.
- There are currently no provisions in the Customs Act enabling the SARS Commissioner to issue advance rulings. It is proposed that an enabling framework for advance rulings be provided in this act.
- There is currently no provision in the Customs Act enabling the commissioner to prescribe the period within which entry must be made in respect of loose or break-bulk cargo imported by sea, air or rail. Government proposes that the Customs Act be amended to allow the commissioner to make rules for the entry time of any category of goods, which may include break-bulk cargo imported by sea, air or rail.
- Because of existing uncertainty, it is proposed that amendments be made to the Customs Act to clarify the legislative requirements for invoices in respect of import and export goods.
- Draft amendments to the diesel refund notes and rules to the Customs Act were published for public comment in 2020 and 2021. Industry-specific workshops were conducted in the second half of 2021 to refine and finalise the proposed reforms. Government proposes that legislation effecting these amendments be put forward.
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