Tito Mboweni does not support government's alcohol and cigarette ban

Tito Mboweni does not support government's alcohol and cigarette ban

- Finance Minister Tito Mboweni does not agree with the government's decision to maintain the ban on the sale of alcohol and cigarettes

- SARS has missed out on an estimated R1.5 billion in tax revenue as a result of the ban

- Mboweni has not ruled out approaching the IMF for a loan as SARS struggles to collect tax revenue

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Finance Minister Tito Mboweni has broken ranks and publicly stated that he does not condone the continued ban on alcohol and cigarettes.

From today the country moves to Level 4 lockdown, which sees some of the more draconian restrictions being lifted, however, the ban on alcohol and cigarettes remains.

The lockdown has cost the government R1.5bn in tax revenue through the ban on alcohol and cigarettes according to SARS commissioner Edward Kieswetter.

Briefly.co.za learned that Mboweni told Parliament in a virtual meeting that if it were up to him, he would have resumed the sale of alcohol and cigarettes.

“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 the 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 want to (continue being) a member of the executive. If you can't fall in line you must leave, so one has to fall in line in that regard.”

He further revealed that the lockdown will potentially drop by a further 32% as the lockdown cripples the economy.

The Sowetan Live reported that Kieswetter explained that SARS was already R13bn behind on tax collection due to the struggling economy.

“This is driven mainly by VAT, excise, by import duties and by pay as you earn 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, and 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.”

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The lockdown has had a devastating effect on tax collection.

“I can share with the committee that months 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 one and a half billion and we're just through the first month,” said the tax chief, while adding that they were concerned that the illicit trade was flourishing during the lockdown.

Mboweni hs not ruled out approaching the International Monetary Fund (IMF) for a $4.2bn loan (R78 billion). He addressed concerns over the potential loan.

“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 conditionalities with the IMF.
“We know what to do for our economy and we'll do what we can ourselves, so I'm not interested in discussions on conditionalities.”

In other news, Briefly.co.za reported that the Fair-Trade Independent Tobacco Association has confirmed its intentions to take the state on over the 're-banning' of cigarette sales during Level 4 lockdown.

Announcing the decision to gradually lift lockdown conditions in the face of the coronavirus pandemic, President Cyril Ramaphosa himself had announced citizens would be able to purchase tobacco products as of Friday.

However, detailing the new lockdown regulations, Minister Nkosazana Dlamini-Zuma shocked South Africans by announcing this would no longer be the case.

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Source: Briefly.co.za

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