Taxman makes a killing from our sins of smoking

It is 1000 days since I quit smoking 40 a day. I could be virtuous and tell you how much money I have saved. But it hasn't made me feel any better. So I won't!

The quacks tell me I have increased my life expectancy by 10 years, from 70 to 80.

So, instead of making a retirement plan for five years, I now have to provide for 15 years. In today”s terms, and based on a R50000-a-month pension, applying a 14% growth rate and a 6% inflation rate, that means I needed to save R2.4-million as a smoker.

As a non-smoker, I must save R6.1-million!

The only prospect of saving enough would be through tax-deductible contributions to retirement funds.

So 40% of my retirement bill will be funded by the taxpayer – R2.4-million.

More actually. If I hadn”t saved, I would have spent it on fast cars and whiskey and just blown the rest. There would have been plenty of VAT and other taxes on that!

Not much will go back in tax in retirement, because the annuity will be taxed at the low end of the income tax scales.

Eleven cigarettes out of a packet of 20 represent sin tax and VAT. I gave up when cigarettes reached R1 each and 55c went to SARS. Now they are R1.50 each and SARS gets 90c. Yes, a 40-a-day habit represents R36 a day in extra tax or R13140 a year. That”s as much as an individual taxpayer pays in tax on a R132000 annual salary.

I was doing my bit for SA as a smoker. SA will pay R10.6-billion in cigarette sin tax on 22 billion cigarettes in 2011/12. And another R4-billion in VAT! That”s a sizable chunk of the extra R18-billion they need in 2012/13 for the National Health Insurance implementation. What a pity all this tax online pokies is already spoken for in the national budget.

I have to ask the question: who is better off for me quitting? Some say I don”t smell so bad. But I”m no healthier or happier. It doesn”t seem to have helped my monthly budget – I”ve just paid it all back in increased rates and electricity.

And the planet is stuck with my carbon emissions for another 10 years.

The Department of Health would have us believe that smoking is a major problem. But what would happen if we suddenly got rid of them. Society could never afford it.

Perhaps we need to go back to the 1-2-3 basics of the “60s and “70s. That”s one bottle of dop, two packets of smokes and a three-litre car. Paying tax all the way and dying before you claim it back!

This article was originally published in the Sunday Times.


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