ECONOMIC STRIFE: SA TO LOSE R4.6BN IN TAX REVENUE A MONTH – EXPERT
Various industries – from producers, farmers to wholesalers and retailers – may also shed jobs.
South Africa cannot afford to lose the more than R4.6 billion it stands to forfeit on tax revenue for every month the prohibition of the sale of alcohol and tobacco is in force.
This is according to economist Mike Schussler, who cautioned that the government’s choice to ban the sale of the two products could cost the economy more strife than necessary.
Just under two weeks into the 21-day lockdown, the effects of the sudden prohibition on alcohol and tobacco began to surface as early as last week in the form of several burglaries of liquor outlets and concerns raised by civil society groups about the dangers of alcohol withdrawal symptoms for those living with addiction during a shutdown.
Rehab centres stopped admitting new addicts when the lockdown came into effect and thousands of alcoholics were left without the support they were used to due to the social distancing regulations.
It was not just revenue which was at stake but the jobs which were likely to be lost as a result of the impact the liquor sale ban, Schussler said. These include various industries from the producers, the farmers to the wholesalers and retailers.
According to Schussler, last year, taxes on the sale of beer alone raked in R15 billion, wine and other fermented beverages pulled in R8.3 billion, and sorghum beer brought in R4.5 billion.
This year, many of these stats were projected to be far higher and the impact of the lockdown bans would be devastating across the board.
“SA is a major wine exporter and is already struggling in the export market. The entire supply chain is affected.”
Producers of beer stood to lose an incredible amount of revenue from units which could reach their sell-by date before they hit the shelves, Schussler said, because beer had a notoriously short shelf-life.
According to Gerard Holden, chair of Franschhoek Vignerons, South Africa makes a million bottles a month with an export value of about R70 million.
Economist Dawie Roodt agreed that South Africa stood to lose more than it could afford to in banning the sale of liquor. The sale of alcoholic beverages for retailers made up around 4% of the total annual revenue for the sector, he said.
“It won’t affect the restaurant sector as much because they are already closed at this time.
“Wholesalers may be less affected as well because they keep large volumes of inventory and the effect on producers even less so, in the short-term, but this could worsen should the lockdown be extended.”
Justice Project South Africa founder Howard Dembovsky was critical of the government’s decision to ban alcohol and tobacco sales during the lockdown, saying it simply made no sense except to indicate that the coronavirus outbreak was being used to further certain political agendas.
“There is simply no logical reason for it and at a time when the economy simply cannot afford further pressure, you go and get rid of two major sources of tax income. It simply makes no sense,” he said.