Finance Minister Tito Mboweni File Picture: African News Agency (ANA)
Finance Minister Tito Mboweni File Picture: African News Agency (ANA)

Mboweni 'lost debate' on allowing sale of alcohol, cigarettes under Level 4

By IOL reporter Time of article published Apr 30, 2020

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Cape Town – With South Africa having lost R1.5 billion in tax revenue that could have been generated from the sale of booze and cigarettes since the lockdown began on March 25, it's no surprise that Finance Minister Tito Mboweni is not a big fan of the continued ban on these two revenue spinners.

Responding to questions during a joint virtual meeting of Parliament's various finance committees today as the country gears itself to move from Level 5 to 4 from tomorrow, Mboweni said: “I didn't like the continuous ban on tobacco and alcohol, but I lost the debate and therefore I have to toe the line.

“I know I'm losing a lot of revenue in the middle of being under pressure to spend, but nevertheless that's a decision of Cabinet and I have to fall in line if want to (continue as) a member of the executive."

Tax revenue collection is expected to decline “by some 32% or more", Mboweni said, as the country's economy implodes due to the Covid-19 lockdown.

According to SA Revenue Service commissioner Edward Kieswetter, it was R13 billion under its target so far, with it likely to worsen.

“This is driven mainly by VAT, excise, by import duties and by PAYE, and I have to indicate that this will get significantly worse once the tax-relief measures kick in because that then introduces further deferral of some of these payments.

"So we anticipate a significant decline in tax revenue purely driven by the state of the economy as well as the tax-relief measures that government has announced.

“I can share with the committee that, in terms of beer sales, we have under-recovered R664m, in terms of wine, we've under-recovered almost R300m, spirits just over R400m and cigarettes just over R300m.

“So year to date our under-recovery from these activities is one-and-a-half billion and we're just through the first month (of the lockdown)."

Another cause for concern, Kieswetter said, was that the illicit trade of cigarettes was flourishing during the lockdown to Sars' detriment.

IOL

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