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How no beer and cigarettes has cost South Africa R15 billion.

PUBLISHED: Thu, 13 Aug 2020 15:26:19 GMT

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As President Cyril Ramaphosa ponders whether to allow South Africans to smoke and drink again,the Commissioner for the South African Revenue Service revealed that the lockdown booze ban had already cost government coffers R15 billion, at a time when it can ill afford it. He also lamented the back street sales that have grown during the pandemic claiming it will take years to stamp them out.

This was the word from SARS Commissioner Edward Kieswetter as he told CNBC Africa that the country had fallen short of its R321 billion tax target, set for the end of July, collecting a mere R316.8 billion- a shortfall of more than R4 billion.

“The real concern is that, year on year, we are already 21% down, which is R86 billion down.If you look at where that comes from, employment taxes are down by R14.5 billion, which is some 9%. That is a concern because many of these jobs may not return. CIT (corporate income tax) is down R16 billion, or 28%, and again there is a concern that some of the businesses that are trading may not also come back,”says Kieswetter.

Here’s how much tax SA lost due to COVID-19 induced alcohol, tobacco ban

VAT was down 11 %, by R14.5 billion; customs duty down by 16.7 billion, 26%, he said. Tax from alcohol was down by R 7 billion, 75% down year-on-year; cigarettes by R3 billion.

“Ïf you then add the downstream taxes from those companies you will also add the loss in corporate income tax and employment taxes that gets you to a shortfall of R15 billion,” says Kieswetter.

Kieswetter admitted that it was difficult for the government to balance the impact of the sale of alcohol on the health of the nation, with the impact on the economy. He lamented the black market that had grown during the ban.

” It is going to take us years to root out the corruption and illegal activity that has taken root in this pandemic, “says Kieswetter.

The only bright spot on the horizon, says Kieswetter, was that the downtime gave SARS time to rebuild after years of taxes failing get back to the taxpayer.

“”We are hopeful, if we worked hard on overall project in rebuilding SARS, that even though not all of the gap would be plugged, but we can handle the decline. We have to try our best We can’t let a good crisis go to waste and we must do what we can to rebuild SARS,”Kieswetter told Power Lunch on CNBC Africa.


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