Finance Minister Enoch Godongwana has officially delivered Budget 3.0. While the nation breathes a sigh of relief over the scrapping of a VAT increase, Gauteng residents who enjoy a drink or a smoke will need to dig deeper into their pockets. The long-anticipated excise duty hikes on alcohol and tobacco remain unchanged. This reinforces the government’s intent to generate additional revenue while also addressing public health concerns.
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Budget 3.0: A Compromise Without Much Consumer Relief
The budget speech-Godongwana’s third in as many months-comes after two failed attempts. Budget 1.0 was postponed without announcement, and Budget 2.0 was scrapped due to backlash over a VAT increase. This version of the budget, presented on 21 May 2025, has found a middle ground by substituting the VAT hike with a fuel levy. This includes notable increases in sin taxes.
These so-called “sin taxes” affect products like cigarettes, alcohol, and tobacco alternatives such as vapes. Though the excise duties were not addressed in Godongwana’s oral presentation, they were outlined clearly in the supplementary budget documents, confirming increases first proposed in March.
How Much More Will You Pay in Gauteng?
Tobacco and vaping products are set to become more expensive. The excise duty on cigarettes and tobacco products will rise by 4.75%. This translates to about R1 more per box of cigarettes. This increase also applies to vapes and alternative nicotine products. These products have surged in popularity across urban areas like Johannesburg and Pretoria.
Meanwhile, alcohol prices are going up by 6.75%, with the exception of traditional African beer, which remains untouched. Here’s a quick breakdown of the price increases:
- Sparkling wine: An extra R1.20 per bottle
- Spirits: An additional R6 per bottle
- Beer: About 16 cents more per can
For frequent consumers, these increases will stack up over time. We will see this a lot in Gauteng’s entertainment hubs, where social gatherings are a major part of city life.
Why These Increases Were Expected
According to Lucky Ntimane, convenor of the National Liquor Traders Council, the increases come as no surprise. “We honestly did not expect that the minister would increase excise duties from the original and budget 2.0 version as the increase was already at inflation plus 2%,” said Ntimane.
He added that the government has already stretched its ability to gain more revenue from excise. “There really is not enough money to be raised in excise as a percentage increase can only give you an extra R100 million,” he explained. This suggests that the increases are more symbolic than substantial. This is from a revenue standpoint, but they still have a real impact on household budgets.
Economic Implications for Gauteng
With Gauteng being the economic powerhouse of South Africa, these increases may reverberate through various industries. Restaurants, bars, and liquor retailers in the province may see a dip in sales, especially among cost-conscious consumers. For smokers and casual drinkers alike, these increases could be a push towards moderation or, potentially, a rise in black market trade where untaxed goods are often available at cheaper prices.
Furthermore, health activists have welcomed the continued rise in excise duties, arguing that it can contribute to reduced consumption and improved public health outcomes.
What’s Next?
As Gauteng continues to grapple with rising living costs, the government faces a tricky balancing act. While revenue generation is necessary for funding public services, every increase in consumer costs can have a knock-on effect on small businesses and vulnerable households.
Budget 3.0 may have avoided the politically unpopular VAT hike, but it still asks South Africans to shoulder more – especially those who enjoy a night out or a smoke break.
While the excise increases are not new, their confirmation in the latest budget speech solidifies what Gauteng residents will be paying over the next year. As the winter chill sets in across the province, so too does the financial pressure – making it more important than ever for residents to budget wisely and consider healthier, more affordable alternatives.
