The three-month deferment of excise tax payment by the alcohol sector in South Africa provides much-needed reprieve for the beleaguered sector, the South African Liquor Brandowners Association (Salba). Picture: Oupa Mokoena/African News Agency(ANA)
The three-month deferment of excise tax payment by the alcohol sector in South Africa provides much-needed reprieve for the beleaguered sector, the South African Liquor Brandowners Association (Salba). Picture: Oupa Mokoena/African News Agency(ANA)

Deferment of tax payment welcomed but alcohol sector irked by repeated restrictions

By Jonisayi Maromo Time of article published Jul 26, 2021

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THE three-month deferment of excise tax payment by the alcohol sector in South Africa provides much-needed reprieve for the beleaguered sector, the South African Liquor Brandowners Association (Salba).

In his televised address on Sunday night, President Cyril Ramaphosa announced that the ban on the sale of alcohol had been lifted and the payment of excise taxes by the alcohol sector would be deferred for three months, to ease the burden on the sector as it recovers.

Salba chairperson Sibani Mngadi said the sector remained under strain, given the outstanding restrictions around the sale of alcohol “with no rationale or evidence provided”.

“The partial opening of sales as well as three months’ deferment in excise tax payments due on alcoholic beverages is a huge relief, but we are nowhere near being out of the woods, especially for the off-site consumption outlets that continues to be restricted to trading Monday to Thursday with no rationale or evidence provided for this decision, in spite of our many requests to secure this from government,” said Mngadi.

He said the government’s use of prohibition of the sale of alcohol, in response to the Covid-19 pandemic, has had “devastating” consequences.

“There was no justification for the prohibition – implemented with no warning, no consultation and poor empirical justification – that prevented legitimate businesses supporting more than 1 000 000 livelihoods across South Africa from operating. These include businesses in the agriculture, tourism, hospitality and manufacturing sectors, and importantly, hundreds of thousands of SMEs,” said Mngadi.

“Right now, our focus is on economic recovery, and the role our industry can play is critical.”

Mngadi said legal businesses in South Africa needed to be allowed to trade without the continual risk of further bans.

“The irrational and arbitrary bans have threatened the lives and livelihoods of tens of thousands of people. In addition, the recent looting and destruction of liquor stores have left many small traders and independently owned liquor stores in financial ruin, some of which may never recover,” he said.

“The combined impact of the alcohol bans and recent looting has also caused irreparable reputational damage to South Africa from an investor confidence and international tourism perspective.”

Salba chief executive Kurt Moore welcomed the three months’ deferment of about R2.5 billion in excise taxes that Salba had sought when the government imposed the latest ban on the sale of alcohol.

“These bans are harmful to both government and business revenue and they are serious threat to jobs, 248 759 jobs are still at risk across the industry – about 1.59% of the national total of formal and informal employment for 2020. In addition, the alcohol industry lost 161 days of trading between 26 March 2020 and 25 July 2021 due to the government’s alcohol bans,” said Moore.

“Even before the cost of the looting to the alcohol industry is factored in, the four alcohol bans have already cost the country’s GDP an estimated R64.8bn or 1.3% of GDP.”

The alcohol industry has repeatedly warned “and demonstrated via research” that the bans had fuelled illegal activity, particularly among crime syndicates whose positions were significantly strengthened during the prohibition on the sale of liquor.

African News Agency (ANA)

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