Mboweni does not support alcohol, cigarette sales ban

Finance minister Tito Mboweni has revealed he does not support the government’s decision to continue with the ban on alcohol and cigarette sales as the country moves from level five to level four of the national lockdown.

At the same time, Sars commissioner Edward Kieswetter told MPs the taxman had so far lost R1.5bn in tax revenue from the sale of alcohol and tobacco since the lockdown began on March 27.

Responding to questions during a joint virtual meeting of parliament’s various finance committees, Mboweni said he would have allowed the sale of alcoholic beverages and tobacco products to resume if he had his way, but had to support the cabinet 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 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 I want to [continue being] a member of the executive. If you can’t fall in line, you must leave.” 

Mboweni said the National Treasury and the revenue service were expecting tax revenue collection to decline “by some 32% or more” as the coronavirus continued to cripple the economy.

Kieswetter said Sars was so far R13bn down on revenue due to a sluggish economy and this was likely to deteriorate further with the Covid-19 lockdown.

“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 the government has announced.”

Kieswetter said in terms of the ban on alcohol and cigarette sales alone, government has lost R1.5bn in potential tax collections since the lockdown began in March.

“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 R1.5bn and we’re just through the first month,” the tax chief said, adding that it was concerning the illicit trade was flourishing during the lockdown.

At the same time, the Fair Trade Independent Tobacco Association is planning to take legal action against the government over the ban on the sale of cigarettes.

The decision comes after co-operative governance & traditional affairs minister Nkosazana-Dlamini-Zuma’s announcement on Wednesday evening that the sale of cigarettes would not be allowed under level four restrictions of the lockdown.

Her announcement came a week after President Cyril Ramaphosa said the sale of cigarettes would be allowed.

“We are consulting with our legal team on a way forward. We are going to court,” the tobacco assocation’s chair, Sinenhanhla Mnguni, told SA FM on Thursday morning.

In Nelson Mandela Bay reactions were mixed on Thursday.

Prince Liba, 22, of Motherwell said though he was a smoker, he was for the ban.

“I think they [the government] are doing good for the country because people who smoke spread the corona. Most people share cigarettes.

“Smokers are still smoking but eventually that will end because there are no suppliers and it will be healthier for them not to smoke,” he said.

Akhona Jonas, 28, of KwaDwesi, said he believed smokers were still smoking.

“People are still smoking — they have managed to find the cigarettes wherever they are,” he said.

Jerome Witbooi, 30, of Central said he believed that if government was better prepared the rules would not chop and change.

“My view is that we are poorly prepared for this pandemic, hence we are where we are with the numbers.

“They would not have to be reversing these regulations [if the country was better prepared].

“People are still smoking. There are lots of cigarettes available, but where they get them I do not know.  

“You have those one [or] two who maybe won’t have access but ... as I walk down the street here lots of people have access.”