Thursday 29 July 2021 – HUGE hikes in ‘sin’ taxes on alcohol and tobacco are a gift for criminals in illegal trade and will deliver another lethal blow to our struggling economy, Tax Justice South Africa (TJSA) warns today.
National Treasury and the South African Revenue Service (SARS) have published for public comment the 2021 draft tax bills, which include increases in excise duties on alcohol and cigarettes that are double the rate of inflation.
“These huge increases are another bonanza for criminals in illicit trade,” says TJSA leader Yusuf Abramjee.
“They simply drive even more hard-up customers to the illegal market, which has exploded as a result of the lockdown sales bans.
“Criminals now control the tobacco trade in South Africa, which has the biggest black market in the world.
“They loot us of billions in tax revenue that should be used to save lives and rebuild an economy that has been ravaged by the pandemic.”
Independent studies show illicit tobacco is now flooding shops across South Africa, with two in three stores in some provinces selling cigarettes at prices below the minimum legal tax rate of R21.60.
“Draconian sin tax hikes simply put legal cigarettes out of reach of consumers and create a bigger market and fatter profit margins for the manufacturers who don’t pay their taxes,” says Abramjee.
“The latest economic research shows any pack of 20 cigarettes selling below R26.55 must be evading tax, yet the criminal manufacturers openly sell way below that.
“We cannot afford to permit this industrial-scale looting of our economy for a single day longer.
“South Africans need a full no-holds-barred investigation into the tobacco trade, which forces these crooks to prove they’re paying their dues.
“Authorities need to administer the laws, inspect tobacco factories and enforce production-counter regulations. And these criminal companies must be brought to justice for robbing our nation blind.”