That small niche of South Africans who are not bothered about checking the price tag on items are unlikely to be ruffled by the increase in import duty on luxury goods.
That is the view of experts, retailers and luxury brand suppliers after Finance Minister Malusi Gigaba's decision to raise the ad valorem excise duty rate by two percentage points, to 7% and 9%.
Affected products include cars, electronic equipment, cosmetics, perfumes and other products generally regarded as "luxury items". They are subjected to additional excise duty if used within the Southern African Customs Union.
The percentage of tax depends on the type of product. For instance, perfumes and video game consoles will be taxed at 9% but makeup at 7%.
Jeremy Nel, CEO of luxury marketing group Luxury Brands, said the approximately 42,000 dollar millionaires in South Africa would not be affected by the "relatively small duty increase on luxury goods, as price is not specifically a deterrent to acquisition at this level".
It is estimated that the top 10% of the population earns 60% of all income and owns 95% of all assets.
A Gucci Marmont top-handle leather bag can set buyers back about R33,000, while a Prada Cahier moon and stars velvet cross-body bag costs about R26,000.
South African Chamber of Commerce and Industry CEO Alan Mukoki said the wealthy generally didn't care about small increases in excise and import duties as they could afford them. "So the effect [for them] would be negligible. They travel a lot as well, so are likely to do their buying overseas."
Atiyyah Vawda, an analyst at Avior Capital Markets in the luxury goods and retail sector, said that although some consumers of luxury goods did buy locally, most made purchases while travelling abroad.
Vawda said the dynamic around spending on luxury items was more around what it would mean for visitors to South Africa to buy these products.
"I don't think you will have major price changes with the luxury brands selling stuff here. [Retailers] wouldn't change the prices [of goods]," said Vawda.
Donald Kau, spokesman for the V&A Waterfront in Cape Town, did not expect to see a significant shift in the purchasing decisions for high-end luxury goods, "which tend to have income elasticity of demand". The exchange rate was likely to have a greater impact on consumer spend, he said.
"The product category is a fairly broad one and retailers will pay close attention to customer reaction to adjusted pricing."
