I don’t approve of the booze and cigarette bans, says Tito Mboweni
In one month, SA has lost R1,5bn in potential sin taxes, adds Sars boss, expressing concern about illicit trade
Finance minister Tito Mboweni says he does not support the government’s decision to continue the ban on alcohol and cigarette sales, as the country moves from level 5 to level 4 lockdown.
At the same time, Sars commissioner Edward Kieswetter told MPs the taxman has lost R1.5bn in tax revenue that could have been generated from the sale of alcohol and tobacco since lockdown began on March 27.
Responding to questions during a virtual meeting of parliament’s finance committees, Mboweni indicated that he would have allowed the sale of alcoholic beverages and tobacco products to resume if he’d had his way, but has to support cabinet’s collective decision.
“I didn’t like the continuous ban on tobacco and alcohol, but I lost the debate and, therefore, I have to toe the line,” Mboweni told MPs from the National Assembly and National Council of Provinces.
“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 I want to (continue being) a member of the executive. If you can’t fall in line, you must leave.”
Mboweni added that the Treasury and Sars were expecting tax revenue collection to decline “by some 32% or more”, as the coronavirus continued to cripple the economy. This would force government to borrow more money to finance its expenditure programmes.
Kieswetter said Sars was R13bn down on revenue and this was likely to deteriorate further because of Covid-19.
“This is driven mainly by VAT, excise, by import duties and by pay as you earn (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.”
Kieswetter said in terms of the ban on alcohol and cigarette sales, government had lost R1.5bn in potential tax collections since lockdown began.
“I can share with the committee that, to date, 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 R1.5bn and we’re just through the first month,” said the tax chief, adding that they were concerned illicit trade was flourishing.
Turning to the government’s decision to approach the IMF for a $4.2bn (about R77,8bn) loan facility, Mboweni said government would do so without entering into any discussions on conditions with the global finance institution.
There have been concerns in some political quarters that seeking a loan from the IMF would compromise the sovereignty of SA.
“We’ve not begun any negotiations, it’s a long process which will take us a number of weeks to get into. We’ve not closed the window, it’s something we should still look into.
“Will there be any conditions attached? My understanding is there will be no conditions attached. In fact, I’m not interested in discussing any conditions with the IMF.
“We know what to do for our economy and we’ll do what we can ourselves,” the finance minister said.