Tuesday 18 February 2025 – Finance Minister Enoch Godongwana must resist the temptation to impose unsustainable ‘sin tax’ increases in his Budget Speech on Wednesday, warns Tax Justice SA (TJSA).
Instead, he should prioritise the urgent need to combat the rampant illicit trade that is robbing our country of more than R100 billion in tax revenue every year.
“Raising taxes on legal alcohol and tobacco products will not generate the revenue the government needs – it will only drive more consumers into the arms of criminals selling illicit goods,” says TJSA founder Yusuf Abramjee. “The fiscus is haemorrhaging billions because law enforcement agencies are failing to crack down on the massive black market in these sectors. This must end.”
Illicit trade in alcohol and tobacco has reached crisis levels, fuelled by excessive taxation that has created a price gap that criminals eagerly exploit. As a result, legal businesses are suffering while crime syndicates thrive, robbing South Africa of the funds needed to provide essential public services such as healthcare, education and infrastructure.
“Instead of imposing more punitive taxes on law-abiding citizens, Minister Godongwana must ensure that enforcement and prosecution authorities are properly resourced to take down the syndicates responsible for illicit trade,” Abramjee says.
“He should also explain why SARS has not been ordered to withdraw the licences of cigarette manufacturers implicated in illicit trade, money laundering and tax evasion.
“By effectively combating these criminal networks, the government could recover billions in lost revenue, relieve pressure on taxpayers and ensure a more sustainable and fair taxation system.
“Targeting law-abiding consumers and businesses with even higher taxes will backfire. The solution is to clamp down on the illicit economy, reclaim the stolen billions and use them to build a better South Africa for all.”
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