Tax Justice South Africa said that Finance Minister Enoch Godongwana must resist the temptation to impose unsustainable ‘sin tax’. File Picture: Jacques Naude / Independent Newspapers
TAX Justice South Africa said that Finance Minister Enoch Godongwana must resist the temptation to impose unsustainable ‘sin tax’ increases in his Budget Speech but focus on clamping down on illicit trade of cigarettes and alcohol.
Yusuf Abramjee, Tax Justice South Africa Founder, said that Minister Godongwana must prioritise the urgent need to combat illicit trade that is robbing our country of more than R100 billion in tax revenue every year. “Raising taxes on legal alcohol and tobacco products will not generate the revenue the government needs; it will only drive more consumers into the arms of criminals selling illicit goods. The fiscus is haemorrhaging billions because law enforcement agencies are failing to crack down on the massive black market in these sectors.”
Abramjee added that illicit trade in alcohol and tobacco has reached crisis levels, fuelled by excessive taxation that has created a price gap that criminals eagerly exploit. “As a result, legal businesses are suffering while crime syndicates thrive, robbing South Africa of the funds needed to provide essential public services such as healthcare, education, and infrastructure.”
Abramjee said that instead of imposing more punitive taxes on law-abiding citizens, Minister Godongwana must ensure that enforcement and prosecution authorities are properly resourced to take down the syndicates responsible for illicit trade. “He should also explain why SARS has not been ordered to withdraw the licences of cigarette manufacturers implicated in illicit trade, money laundering, and tax evasion.”
Abramjee added that by effectively combating these criminal networks, the government could recover billions in lost revenue, relieve pressure on taxpayers, and ensure a more sustainable and fair taxation system. “Targeting law-abiding consumers and businesses with even higher taxes will backfire. The solution is to clamp down on the illicit economy, reclaim the stolen billions, and use them to build a better South Africa for all.”
BUSINESS REPORT