SOUTH AFRICA:HEALTH GROUPS WELCOME TOBACCO TAX HIKE

[Robert Weissman <rob@essential.org>]

HEALTH GROUPS WELCOME TOBACCO TAX HIKE
by ANC News Briefing (8875) 
Date: Thursday, 2/18/99

CAPE TOWN 17 February 1999 Sapa

    Health Minister Nkosazana Zuma and the anti-tobacco lobby have
welcomed the hike in tobacco taxes announced in Wednesday's Budget. 

And even Transport Minister Mac Maharaj, who lit up a cigarette
immediately he stepped out of the National Assembly after colleague Trevor
Manuel's speech, said he agreed with the increase. 

"I know the burden falls very heavily on me," he said. "I don't think
Trevor has done that out of vindictiveness." 

Manuel announced a 20 percent hike in excise duty on cigarettes, which
means tax will for the first time make up half the price of a packet. 

This level has long been a target of government and the health lobby. 

Manuel said the increase, which was "in accordance with health policy",
brought excise duty to R2,45 per packet in the most popular price
category. 

In the interests of fairness, the same percentage would be applied to all
other tobacco products, which would require some significant one-off
adjustments. 

Cigarette tobacco would go up by 76c per 50g, pipe tobaco by R1,56 per
100g, and duty on cigars would rise by R7,33 per 23g. 

He released a table showing South Africa's existing tobacco tax of 44,5
percent was low compared to countries such as Canada, where it ranged from
51 to 71 percent, Japan (59 percent), Portugal (82 percent), Kenya (54
percent) and the United Kingdom (78 percent). 

Zuma said after the speech that the increase was consistent with her
department's aim of protecting children from smoking.  Children did not
enjoy the same financial "elasticity" as adults, and more expensive
cigarettes would be out of their reach. 

She said she anticipated further increases in years to come. 

The National Council Against Smoking said that while the increase simply
followed price hikes set by the tobacco industry itself, it was good
health and fiscal policy. 

Manuel's Budget would do more to prevent children becoming addicted to
nicotine than all the doctors in South Africa put together, it said. 

The Medical Research Council welcomed the tobacco tax, but said Manuel's
increase in excise duty on alcohol, and specifically beer, which was the
product most consumed by South Africans, was well below inflation. 

The government had not taken advantage of the chance to reduce alcohol
consumption. 

Manuel said in his speech that excise duty on beer would go up 1,6c a
340ml can, unfortified wine by 2,5c a 750ml bottle, cider by 2,7c a can
and spirits by 56,6c for a 750ml bottle. 

This followed the international practice of taxing high-alcohol content
products at a higher rate than low-alcohol products. 

The good news was that excise on soft drinks had been cut by 19 percent. 

These changes, together with the new tobacco taxes, should yield R123
million in revenue in the coming financial year.
------------------------------------------------------ 11:01 AM on 2/18/99