Sars loses out on R1.5bn in April due to ban on alcohol and cigarettes

There has been an underrecovery by the SA Revenue Service (Sars) of over R1.5bn on the sale of alcohol and cigarettes in the month of April, commissioner Edward Kieswetter said on Thursday.

The underrecovery is due to the controversial prohibition on the sale of alcohol and cigarettes under the Covid-19 lockdown regulations. This prohibition was extended in the Level 4 lockdown announced by co-operative government and traditional affairs minister Nkosazana Dlamini-Zuma on Wednesday.

The underrecovery comes as the lockdown has shut down the economy and significantly reduced tax revenue. Finance minister Tito Mboweni said revenue in 2020/2021 could be 32% lower or more at a time when there was immense pressure on government expenditure.

He said he did not support the prohibition on cigarette and alcohol sales but as a member of the cabinet, he had to go along with the decision taken.

“I lost the debate and have to toe the line,” Mboweni said.

Kieswetter said in reply to a question by an MP during a virtual meeting of parliamentary committees that the underrecovery on beer was R664m, the underrecovery on wine was almost R300m, on spirits was just over R400m and cigarettes just over R300m. And this was just in the first month. He noted that the prohibition had encouraged the sale of illicit cigarettes, which was of concern.

Replying to a question on the Land Bank, Mboweni stressed that the bank was too big to fail so he could not say definitively that there would be no further support for state-owned enterprises (SOEs). However, he emphasised that poorly functioning SOEs would be sold.

Kieswetter and Mboweni were speaking at a virtual meeting of parliament’s finance committees, the appropriations committee and the standing committee on finance.

ensorl@businesslive.co.za