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Sin taxes 'won't see large increase' - expert

By Staff Writer
During the 2015 Budget Speech, there will be the inevitable announcement on the increase on 'sins' known as the 'sin tax' (taxes on cigarettes and alcohol). But experts are split on whether the increases will be larger than normal.
 
Keith Engel, deputy chief executive at the South African Institute of Tax Professionals (SAIT) believes that we won't see a large increase in this area due to fears of increased smuggling.
 
Meanwhile, Ferdie Schneider, national head of tax at BDO South Africa said: "History has shown that we may potentially expect a higher than usual increase, especially in light of South Africa having a lower excise duty on alcohol and cigarettes than many other countries globally."
 
Peter Attard Montalto from Nomura concurs pointing out that duties and sin taxes could face higher increases "as an alternative to more broad-based VAT increases."
 
Other luxury goods may be taxed too. There is the possibility of raising the ad valorem duty on luxury goods to assist in government's R12 billion goal, announced in the Medium Term Budget Policy Statement last year.
 
Another area where we might see changes in tax is with gambling tax. In a press release from PwC, Kyle Mandy, head of national tax technical stated: "In the 2012 Budget it was announced that a national gambling tax would be introduced from 1 April 2013 in the form of a 1% levy on gross gambling revenues and that this would also apply to the national lottery. In the 2013 Budget it was announced that legislation would be introduced in 2013. There have been no developments in this regard, although we understand that the proposal is still on the table. It is expected that this tax will now be implemented."

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