Tax Justice SA: Mboweni’s budget a picnic for tax dodgers

accreditation

Tax Justice South Africa released a statement on Saturday saying that while Minister of Finance Tito Mboweni did not hike sin taxes as much as expected, it lacked adequate measures to combat take dodging companies in the tobacco and alcohol industries.

During his Budget Speech this past Wednesday, Mboweni announced price hikes for alcohol and tobacco products including 8 cents for a 340ml can of beer, 14 cents for a 750ml bottle of wine, R2.89 for a bottle of 750 ml spirits, including whisky, gin or vodka and 74 cents for packet of 20 cigarettes.

"In line with Department of Health policy, we will start taxing heated tobacco products, for example hubbly bubbly. The rate will be set at 75% of the rate of cigarettes. Electronic cigarettes, or so-called vapes, will be taxed from 2021," said Mboweni.

Tax Justice South Africa head, Yusuf Abramjee said Mboweni's hikes on alcohol and tobacco duties would enable "criminals in the dark economy" to raise their prices accordingly and profit even more than before instead honouring their tax obligations.

"The massive scale of illicit trade means that the 74% increase in a packet of cigarettes alone is worth an extra R300 million a year to counterfeiters and smugglers. Crooks selling illicit alcohol and fuel are enjoying similar windfalls," said Abramjee.

Abramjee said while sin taxes were effective as deterrents of unhealthy consumer patters and sources of revenue these taxes are often evaded by criminals in the illicit trade there is no benefit for the fiscus.

"A crackdown on illicit trade is long overdue. These criminals are systematically looting R100 million a day from the State by stealing taxes across multiple sectors. Those taxes should be spent on education, policing, health care and other essential services. Instead, they're making crooks rich and even funding other criminal enterprises," said Abramjee.

The Tax Justice SA statement said Abramjee would chair a press conference in Johannesburg on Monday to highlight the impact of illicit trade on the economy and revenue collections.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
Rand - Dollar
14.75
-1.0%
Rand - Pound
20.26
+0.1%
Rand - Euro
17.29
+0.2%
Rand - Aus dollar
10.72
+0.1%
Rand - Yen
0.13
+0.1%
Gold
1,754.62
0.0%
Silver
22.41
0.0%
Palladium
2,019.00
0.0%
Platinum
944.00
0.0%
Brent Crude
75.34
-0.4%
Top 40
56,605
-0.9%
All Share
62,864
-0.7%
Resource 10
56,497
-3.9%
Industrial 25
81,170
+1.0%
Financial 15
14,018
+0.5%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Voting Booth
What potential restrictions on unvaccinated South Africans may make the biggest difference to public health, the economy?
Please select an option Oops! Something went wrong, please try again later.
Results
Limited access to restaurants and bars
9% - 43 votes
Limited access to shopping centres
17% - 82 votes
Limited access to live events, including sport matches and festivals
28% - 133 votes
Workplace vaccine mandates
45% - 215 votes
Vote