Alcohol industry welcomes inflation-linked sin tax increases

Alcohol producers have expressed strong support for the government’s decision to restrict sin tax increases to inflation rates, emphasising that such predictable adjustments are essential for maintaining industry stability and combating illicit trade. Finance Minister Enoch Godongwana announced that these increases in “sin taxes” are necessary, despite a more optimistic revenue forecast for the country. As a result, the tax on tobacco products will rise in line with inflation in 2026/27, including taxes on electronic nicotine and non-nicotine delivery systems, Godongwana announced.

Excise duties on alcoholic beverages will also increase at inflationary levels. Heineken Beverages said the minister’s approach reflected consideration of economic pressures and the rapid growth of illegal alcohol sales. Maroga said keeping excise adjustments predictable helps narrow the price gap between legal and illicit products, strengthening enforcement and compliance efforts.

Heineken also welcomed the announcement of the National Illicit Economy Disruption Programme, saying the company looks forward to partnering with the government. Industry concerns about illicit trade have intensified in recent years. Heineken cited datashowing illicit alcohol volumeshave risen by 55% since 2017, with growth correlating with periods of above-inflation excise increases.