[imagesource: Unsplash/Helena Lopes]
The good news, for those who enjoy a toot and a smoke at the end of the day, is that the alcohol and tobacco bans appear only in the rearview mirror.
Just remember that multiple health experts are already warning of a third wave here in South Africa, so this really is no time to be complacent.
The bad news is that during his budget speech on Wednesday, Finance Minister Tito Mboweni did announce an increase in sin taxes, which will see the price of alcohol and tobacco products increase.
This handy graphic was put together by EWN:
It might not sound like much, but the liquor industry, already suffering from the bans that have come before, has expressed grave concerns.
Here’s Kurt Moore, CEO of the South African Liquor Brand Owners Association (SALBA), speaking to IOL:
[He] said that with thousands of businesses across the value chain looking into the financial abyss due to the three sales bans over the past 12 months totalling R36 billion in revenue losses, there was no contingency for tax increases forcing further drastic action to cut costs.
“We will see tens of thousands of job losses within the sector whose livelihoods cannot be sustained. Tax adjustments needed to take into consideration a significant increase in the size and efficiency of the illicit market that has grown during the sales bans.
“The 8% tax increase on legal alcohol gives an opportunity for further growth in illicit trade competitiveness as more consumers are less able to afford legal, tax paying alcohol products,” Moore said.
Similar concerns were expressed by Distell Group Holdings Ltd., with Richard Rushton, Distell’s chief executive officer, telling The Daily Maverick that the hikes are going to “push consumers towards the illicit market.
Estimated to have grown to 15% of the South African alcohol industry, the illicit market may have cost tax collectors 6.4 billion rand ($432 million) under various bans or restrictions prompted by efforts to curb the spread of Covid-19. The government has said excessive drinking leads to injuries that crowd hospital emergency rooms, just as the virus strains the health system.
“We are going to have to engage government again,” Rushton said. “Perhaps we didn’t do a good enough job in providing enough education around it. We’ll own that responsibility.”
Perhaps the greatest frustration for the average South African comes from knowing that as much tax as we pay, our government will still find new and creative ways to squander it.
A stiff, overpriced drink can’t change that fact.
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