‘Treasury buying into the idea of sin taxes changing consumer behaviour’

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The University of Cape Town’s (UCT) School of Economics Professor, Corne Van Walbeek, says Treasury is slowly buying into the idea that you can change consumer behaviour by increasing sin taxes.

In his budget speech on Wednesday, Finance Minister Tito Mboweni announced an increase of up to 8% on excise duties on alcohol and cigarettes.

In the video below, Finance Minister Tito Mboweni delivers the 2021 budget speech:

In his speech, Mboweni said excessive alcohol consumption can lead to negative social health outcomes and consumers do react to price increases.

Van Walbeek says, “He [Mboweni] made it very clear that he was increasing the excise tax on alcohol and tobacco with the aim of reducing consumption. He made it very clear that people respond to high prices.”

“Treasury is buying into the argument that one can actually change people’s behaviour by increasing excise tax. Excise tax of 8% is not that bad, South Africans have a significant problem with alcohol and tobacco use,” he adds.

Infographic: 2021 Budget breakdown: