Alcohol ban cost South Africa 117,000 jobs and billions in tax revenue

The nine-week ban on liquor sales during lockdown alert level 5 and alert level 4 cost South Africa 117,000 jobs and billions in lost tax revenue.

Speaking to CNBC Africa, South African Liquor Brand owners Association (SALBA) CEO Kurt Moore said the ban resulted in business casualties and job losses.

Moore welcomed the relaxed regulations which allow the limited trade of alcohol but said restrictions on gatherings is still impacting the industry.

While the spike in alcohol sales this week is good news for the industry, he said they expect things to settle down quickly.

Moore said it remains to be seen whether the industry will be able to recover fully, due to the continued COVID-19 restrictions.

He added that the online sale of alcohol is expected to show strong growth during the lockdown.

“We had plans to bring online more on stream a few years down the track, and those plans have been brought forward now,” Moore said.

“Consumer prefer to buy their alcohol online and be delivered to them rather than joining queues at bottle stores.”

He said there are opportunities to grow with online alcohol sales, but it is unlikely to make up for the job losses because of the ban.

R15 billion in lost taxes

SARS commissioner Edward Kieswetter recently said South Africa lost between R14 billion and R15 billion in taxes because of the ban on alcohol and cigarette sales during the lockdown.

Kieswetter said they estimate that the direct shortfall in excise duties because of the ban on the sale of alcohol and tobacco products is around R2 billion.

This, however, is only a small part of the total loss in taxes. If you go down in the value chain, he said, SARS also loses out on:

  • Sales tax (VAT) which is paid on alcohol and tobacco products.
  • The loss in profit which companies would have paid tax on.
  • More people would have been employed who would have paid personal income tax.

“Our estimation is that we have lost R14- to R15-billion in taxes just in the past two months [because of the cigarette and alcohol ban],” said Kieswetter.

He said as a taxman he is delighted that South Africans will be allowed to buy alcohol under alert level 3, which kicks in on Monday.

He said South Africa has big tax holes to fill and that we need every bit of tax revenue which can be collected.

Now read: South Africa lost R15 billion in taxes due to cigarette and alcohol ban

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Alcohol ban cost South Africa 117,000 jobs and billions in tax revenue