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Press Release

Sin tax hikes would fuel mafia state

Friday 16 February 2024 – INCREASES in ‘sin’ taxes in next week’s Budget would be a green light for gangsters who are threatening to turn South Africa into a mafia state, Tax Justice SA warns today.

Significant hikes in excise taxes on alcohol and tobacco products are among measures that Finance Minister Enoch Godongwana is forecast to announce to boost state revenue in his Budget Speech on Wednesday.

“Unsustainable excise taxes are a major reason for the rampant illicit trade which is already robbing our country of R100 billion every year,” says TJSA founder Yusuf Abramjee.

“With the cost of living soaring, any hike in sin taxes on cigarettes or alcohol would drive even more consumers to the illicit market, depriving the state of more vital revenue and further enriching sophisticated criminal networks.

“That would signally fail in its stated intention of boosting national coffers and would simply fuel the culture of lawlessness that risks transforming South Africa into a mafia state.”

Global analysts Oxford Economics say that 63% of South Africa’s cigarette trade is now illicit, depriving the fiscus of R27 billion a year – or R74 million every day. The South Africa Liquor Brand Owners Association (SALBA) reports that 22% of the alcohol trade is illicit, costing R11 billion tax revenue annually.

“This is money that should be paying for schools, hospitals, housing and other essential services like electricity,” says Abramjee.

“Yet tax is being paid on only one in three cigarettes sold in South Africa. It would be easy to boost state revenues by cracking down on the illicit sector, yet Government seems intent on doing the opposite.

“The lockdown sales ban, high excise taxes and the proposed tobacco bill are all gifts for the gangsters who are flooding the country with tax-evading ‘cheapies’.

“Instead of enabling criminal kingpins to loot our nation, Government should do its duty of enforcing existing laws. That would protect honest businesses and jobs and generate the income needed to build a better South Africa for all.”