Wednesday 24 February 2021 – FINANCE Minister Tito Mboweni’s big hike in sin taxes is another gift to criminals in illicit trade and another blow to legitimate tax-paying businesses and consumers, says Tax Justice SA (TJSA).
The black market in tobacco and alcohol that exploded as a result of lockdown restrictions is likely to soar further out of control, less tax will be collected and thousands of honest livelihoods will be lost in the wake of the excise increases that are over double the rate of inflation, it warns.
TJSA founder Yusuf Abramjee says: “The sin tax hike is the worst possible news for hard-up South Africans, who are fed up seeing criminals get rich while their own families go hungry.
“It means yet another payday for the organised crime syndicates that added alcohol and tobacco to their usual portfolio of hard drugs, protection and prostitution over the last year.
“Illegal networks that have flooded the market with smuggled and tax-evading products will become even deeper embedded in the market and the impact will take years to reverse.
“Taxes lost by government as a result of the lockdown prohibitions add up to more than twice the amount it plans to spend on the vaccine roll-out.
“Now the same law-abiding industries affected by those bans are being targeted to bail out a government who have squandered so much money.
“Minister Mboweni’s announcement is like a charter for criminals. Higher prices for legal products will only make illicit goods more attractive to consumers and the illegal players will simply grow even stronger.
“If your objective was to kill off legitimate companies and divert trade to tax-dodging criminals, this would be your business blueprint.”