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Presidency will respond to alcohol requests

On Friday, after receiving a letter threatening an approach to the Constitutional Court.
For one thing, the ban on the sale of tobacco and alcohol will cost the fiscus millions in lost excise duties and taxes. Image: Shutterstock

President Cyril Ramaphosa’s lawyers have asked the Gauteng Liquor Forum to wait until the end of business on Friday (April 17) for a response to their letter requesting that he lift the ban on the sale of alcohol during the nationwide lockdown aimed at curbing the spread of Covid-19.

The forum sent the letter to the president over the weekend, threatening to approach the Constitutional Court if he does not lift the ban, arguing that it is “unreasonable and unconstitutional”.

The forum says it represents around 20 000 township shebeens and taverns.

The Presidency asked that it hold off going to the courts pending a meeting with the National Command Council and other relevant stakeholders this week in order to discuss the government’s economic assistance programme.

It said it should respond by the end of business on Friday.

Discussions

“The National Command Council, the Presidency and other relevant parties are meeting again this week, specifically to discuss the details of Government’s economic assistance programme,” it said, adding that it anticipates that the results of these discussions “may well have a bearing on the issues” raised in the letter.

The forum is not the only liquor industry body to raise concerns over the banning of the sale of alcohol during the five-week lockdown.

The South African Liquor Brandowners Association (Salba) sent a request to the government pleading with it to allow the responsible consumption of alcohol under very strict conditions.

Salba says the restrictions considered for an extended lockdown period should balance both the impact on effectively mitigating health risks and preserving the stability of the legal liquor industry.

Businesses at risk

It says the current trading restrictions that prohibit the sale of liquor in both off- and on-site consumption liquor sales, as well as certain exports, are placing the liquor industry at significant financial risk, giving rise to very low liquidity levels.

“Unlike other non-essential consumer goods, our industry has excise liabilities which some liquor firms cannot honour due to extremely low cash flows arising from a loss of both domestic sales and exports,” the proposal reads.

In its proposal to government, it highlights that South Africa liquor industry sales had been in decline prior to Covid-19 due to deteriorating economic growth conditions in the local market.

In an extended lockdown scenario, it says the wine, spirits, ready-to-drink and beer categories will lose R12.6 billion in wholesale revenue, along with a loss of R3.5 billion in excise tax revenue.

“Categories such as wine which has seen double-digit declines due to the 2017 and 2018 droughts face an overall industry collapse and lasting damage to the value chain due to farms exiting or facing liquidation,” it says.

It warns that the impact on the agricultural sector in the form of farm liquidations and job losses will be felt for years to come without some relaxation to the current trading restrictions.

“Our complex value chains mean that suppliers of packaging material, logistics partners and other related services will also be negatively impacted by the ban of local sales and exports,” the proposal reads.

Salba’s recommendations

  • Liquor sales to be allowed only in off-consumption sales outlets, including online platforms, which will limit travel by consumers;
  • Licensed taverns and holders of micro-manufacturing licences should be granted a special dispensation to operate strictly as off-consumption outlets subject to the strict social distancing requirements;
  • Trading between 09:00 and 18:00 on weekdays and 09:00 and 16:00 on Saturdays, with no liquor sales on Sundays and public holidays;
  • Prohibition on price promotions which act as a direct incentive to purchase more liquor volumes at lower cost and the offering of liquor products for free;
  • Hand sanitiser to be available at outlets to encourage hygiene among consumers and retail employees; and
  • The number of patrons allowed in an off-consumption liquor outlet to be limited to a maximum of one person per square metre.

Moral obligation

Salba says it understands that it is its moral obligation to fully support the South African government in its attempts to stop the spread of Covid-19. However, it calls on the government to loosen the regulations.

“We are in full agreement that the responsible consumption of alcohol should only be allowed under very strict conditions and we are very sensitive to the requirements of government’s strategy to effectively contain the Covid-19 pandemic in South Africa,” it says.

It is aware of the societal risk that excessive alcohol consumption poses to adhering to social distancing rules, the prohibition of gatherings, and general compliance with the lockdown rules.

“The restricted trading recommendations we propose have been designed to assist in mitigating these health and societal risks whilst balancing the urgent need for industry stabilisation and reducing illicit trade,” Salba says.

It adds that the current prohibition on all liquor exports should be terminated with effect from midnight on Thursday (April 16).

Another non-essential body that has spoken up against the ‘rigid ‘lockdown regulations, is the South African arm of British American Tobacco (BAT), which two weeks ago also urged the government to reconsider its ban on cigarette sales during the lockdown, saying it would have unintended consequences as people hit the streets to feed their cravings.

Brewing a black market

Tax Justice South Africa founder Yusuf Abramjee adds to this, saying that the ban encourages the movement of people and illicit trade.

“The ban is dangerous in so many ways, it is encouraging movement, encouraging looting, impoverishing people who are paying sky-high prices, and impoverishing the country when it needs the money most. All this is occurring when the only stated objective is to limit the movement of people.”

Abramjee says because 11 million smokers can’t buy cigarettes in the stores they visit for food, they are forced to seek them elsewhere and may spread Covid-19 unnecessarily.

“Every day of the lockdown, the nation is losing more than R35 million in lost excise duties on cigarettes alone, money that is desperately needed by government to fight this crisis,” says Abramjee.

“Instead that money is going to criminals who are charging inflated prices on the black market and exploiting the most vulnerable.”

Tax implications

Bernard Sacks, tax partner at Mazars, says the banning of the sale of tobacco products could have widespread effects on tax collections in South Africa, as the black market is fuelled.

For the 2020/21 period it is budgeted by National Treasury that the South African Revenue Service (Sars) would collect R14.4 billion from cigarettes and tobacco, and R0.5 billion from pipe tobacco and cigars in the form of excise duties.

Sacks says the banning of tobacco is also likely to create an ‘underground’ industry – from which it is unlikely that any taxes will be collected.

He says in the past the illicit tobacco industry – with emphasis on cigarettes – has left a gaping hole in excise duties, and probably value-added tax (Vat).

Based on a report issued by the Tobacco Institute of Southern Africa (Tisa) during 2019, the illicit tobacco economy cost the fiscus in excess of R32 billion in tax revenue between 2010 and 2017.

However, another tax manager at Mazars, Tertius Troost, points out that this does not consider the Vat that is levied on the sale of these products.

“The total amount projected to be collected is not insignificant. The banning of these products would [influence] revenue collection, additionally, we could see [a] further flare-up in the illicit tobacco economy – something that Sars has been struggling to get under control,” says Troost.

National Treasury’s figures could be revised in October 2020 (during the medium-term budget policy statement) and only at this time will the true impact of the lockdown and Covid-19 be seen.

“We are bound to see National Treasury looking to borrow more money in order to fill the tax revenue gap that will arise,” Troost says.

He notes that one should remember that the fiscus will not be collecting excise duty or Vat on other non-essential items such as alcohol, therefore the tax revenue will be adversely affected over a broad range of tax revenue income streams – not only excise duty on tobacco products.

Read: South Africans urged to ‘endure a little longer’ as lockdown extended

On Thursday night last week (April 8) President Cyril Ramaphosa extended the lockdown a further two weeks – effectively to Friday, May 1, it means the purchasing and selling of liquor are still prohibited.

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Why do the presidency need so long to decide? Have they not been thinking and pondering about these matters for the past few weeks?

I GUARANTEE YOU they have their stash

You have a lot more faith in the equal application of laws in SA than I do.

We now have a COMMAND COUNCIL that will rule if we can have a beer or not !!!

Great stuff – one of these days they will even regulate the amount of milk in your coffee ne !!

Bloody communists all !!

The position by Bheki Cele around both the relaxation of cigarettes and alcohol is laughable in the least and idiotic, inconsiderate and an abysmal mistake at most.
My position is based on the following and for one second maybe Bheki Cele should realize that this decision impacts him only in the event that something illegal is taking place in regards to these two commodities.
Let’s look at two events in uncovering why I believe that Government and the president himself need to review and overturn this decision immediately and as a matter of urgency.
Firstly, and again just the other night at the announcement of the Shutdown extension the president himself announced a 1 third salary reduction for all ministers amongst others and then proceeded to ask business to try and continue to pay their creditors and the salary for staff. Now pray tell me Mr Bheki Cele how does a small café or a garage and even supermarket do this when you prevent them from selling their stock and making revenue and profit in order to pay bills and salaries.
Secondly, given the state of our economy as we feel the effects of the Corona virus on top of our current state of recession which are all compounded by the effects of our reason promotion to “Junk” status we will surely see our unemployment numbers climbg again very shortly and by a massive number too. On top of this government will be looking for ways to protect existing government revenue and taxes in order to prop up the economy. In light of this and for so many reasons including the taxes that SARS collect from both cigarettes and alcohol, the jobs that these sectors create and provide and the money that these companies who drive these sectors re-invest into this country; please take the Minister of Police out of the decision process as the buyers and sellers are largely and mostly not criminals but law-abiding and tax paying citizens. The action of banning sale of these products has done nothing more than criminalize citizens and disadvantaging businesses and their employees and creditors too and hurt the country. There are no winners in the decision.
I only ask why we are so intent on arresting and punishing the offenders of the anti-tobacco and alcohol laws under shutdown and yet not one corrupt official has had his property confiscated or has been arrested or fined. These very people of which there are hundreds who stole billions have caused this country more harm the corona virus ever will.

I don’t think that the government thought this issue of cigarette’s and Liquor sales through completely??? I think it was someone’s “great” idea that has severe consequences for the “ALREADY BROKE” government.You have to start asking HOW BAD CAN IT GET?? No fuel levy’s, no sin taxes, no airport taxes, reduced income for workers/reduced tax, people filing unemployment go from payer to payee, reduced trade tax income???? This is what you vote for???South Africa needs a leader that put’s country over party. The debate I watched 8 years ago said “It takes a fledgling democracy 40 years to become a true democracy.””For the first 20 years they steal all the money and hire all their friends and family.” Does that sound familiar????Truer words!!

After all the ANC branch meetings, the ANC Youth Forums, the national conference at Nasrec, a War Room, the leaders in Luthuli House, The National Executive Committee, The National Council of Provinces, parliament, The Tripartite Alliance, and NEDLAC they still need a Crisis Management Team and a Central Command Centre.

Clueless and confused people just love meetings. Holding meetings give them a false sense of security and a false sense of control. This is how they can pretend they are earning their salaries. The one clueless guy without any ideas comes from the South, another comes from the North, they gather and they greet, they laugh and all of a sudden, between them, emerges a plan to ban the sale of alcohol and cigarettes. A plan that was put forward by a clueless cadre who is a government employee, who receives a salary from taxpayers, from bottle stores most likely.

Here we are, put under house arrest by a bunch of clueless and insecure politicians to curb a strand of DNA that will eventually land on everyone on earth.

The person who has to pay the price, the one who has to accept accountability for his actions, the man in the street, in other words, should have the power to decide if he wants to buy alcohol or not. If he makes a mistake, then he pays for it. Unlike the current situation where clueless politicians hold endless emergency meetings in Central Command Centres and War Rooms to make mistakes and send the invoice to us anyway.

Unfortunately ours are nearly at the 30 year mark and still stealing with impunity. If I remember correctly, it was our communist minister of trade and and industry who threw in the sigarette ban at the last minute. A hapless, clueless and incompetent bunch who seem to have not the vaguest idea where the fiscus gets its money from.

Yaa. Hey??

Now this poor country needs the whole defence force and police force to run after people looking for alcohol and cigarettes that has nothing to do with fighting the virus. Regardless of what the mad hatter say’s.

During prohibition in the US violent crime picked up by 78%.

Problem is it will be the same people (brain power) deciding on this that has thrown billions away after SAA. Even a school child could predict that it was a waste of money. Primary school child.

Eish! Wonder what the cost of flattening the curve is going to be.

If he is responding to requests….. Mine is a G&T

Wow , South Africans really love their booze and cigarettes it seems.

Why not take this time to try and be healthy and not drink and smoke your sorrows away.

The problem for me is that they are creating a criminal underworld , drinkers will drink and smokers will smoke. That’s insane!! How many other countries have banned this and even worse criminalized it ??? None that I know off. It’s a bloody disgrace.

On the tax argument , the country wil have a massive shortfall already.

Also if most business don’t trade for a month , then tax revenue doesn’t go down 1/12 . Unfortunately most business make less that 10% return in a full year , that means its more likely that your entire years profit will be wiped out in one month and that you tax payable will go down 12/12 !!!!

We are in trouble….. big big trouble

They need the whole defence force and the whole police force to go after drinkers and smokers.

Who is going to go after the criminal underworld?

The NPA?? Hahaaa. Forget. Madam is building capacity.

Strange how short memories are. Much is punted over Apartheid, but maybe not much is known about the repressive, discriminatory and patronizing liquor laws perpetrated against black people at the time. The Daily Maverick has an excellent historical summary of it. I remember as a child on a farm, watching with horror, the police kicking over the paraffin tins of homemade beer, shaking the sacks of flour over the humiliated black men, “to make them white”, before proceeding to beat them up. Deya vu. This has left me with a horror of government officials “acting in your own good” and I hope the Gauteng liquor forum will fight with all they have not to have these abhorrent laws perpetrated upon them again.

You are absolutely correct. There is in practise, hardly any difference between the national socialist ideology of the apartheid days & the marxist instincts of the current crew. Their first reaction to any crisis at all is to work out how to control every action by every citizen. It is disappointing.

I salute you, my brother.

Thank you for your wonderful contribution Griet. Readers need this perspective on the situation. Earnest comments like yours will motivate the much-needed fraternity in our communities.

The Trauma Units in our hospitals are empty for the first time in our history – no drunk driving accidents, no alcohol fueled violence…….perhaps the lockdown without alcohol has shown us that our frontline medical staff have a better chance of dealing with the peak of this crisis ( if and when it comes) without the added stress of having to deal with idiots who need alcohol to give their lives meaning!

“no drunk driving accidents, no alcohol fueled violence…….perhaps the lockdown without alcohol”

Oh so it has nothing to do with the fact that people is “forced” to stay home during the lockdown?

Right..

It shows us which parts of society should be in permanent lockdown. But hang on, isn’t it that part of society that overcrowds prisons already? Ok, so in effect, that part of society has been in lockdown before lockdown even started.

Well, ‘they’ can enforce the smokes and booze laws very nicely. But ‘they’ have trouble enforcing the drug laws?

“When it comes to the sale of cigarettes we are losing approximately R35 million per day in levies and the other taxes imposed in cigarettes.” — Howard Dembovsky, Chair – Justice Project SA

“In alcohol, we are looking at losing probably about R100 million per day in levies and revenues.” – Howard Dembovsky, Chair – Justice Project SA

You can find this article here: http://www.702.co.za/articles/380162/lockdown-alcohol-and-cigarette-ban-costing-sa-billions-justice-project-sa

What the hell does government do with this money??? Sheesh when I heard that, I was flummoxed! Also, we drink and smoke that much???

Anyway, I dont see Ramaphosa lifting this. I dont see this lockdown ending anytime soon. So get ready for a very looooong detox period folks, up to September 2020 according to opinion.

Cold beer and pizza! I miss those days.lol

The decision to not allow sales of cigarettes and alcohol was Command Control Overreach.

Shorten the hours and continue to disallow shebeens etc but the tax does help.

Now is a good time to let Supermarkets sell beer too.

As clumsy as these laws are the government was probably trying to prevent phuza parties in the townships where the virus will spread.

100%. I agree with the alcohol ban.

Alcohol lowers inhibitions and social distancing and things that government is trying to promote goes out the door.

Due to alcohol ban state hospitals hopefully will publish stats on stabbings etc. being dramatically reduced.

Viva alcohol ban and ciggies ban.

On a lighter note – The ANC has really fulfilled all its promises to the electorate. They don’t have to work, they can sit at home and receive grants and financial aid, while the only people who have to keep on working are the farmers.

Under the old government, the people worked for the farmers. Now the farmers work for the people. I must say, it is much better this way. Just leave the farmers alone. Let them plant and harvest and milk their cows and kill their chickens. Just pay them a decent price for their contribution to society and lockdown can continue forever.

I’m sure township technology has reached the point of fractional distillation of hand sanitiser, the top fraction has quite a kick, with interest botanical notes.

Not sure if it should be a OMG or a WTF response to the majority of the above comments.
We’re up [excrement] creek and some folk just don’t get it. Look at the global stats of countries that have imposed control versus those with a totally disorganised response. The ‘Make (it) Great Again’ country is taking the lead ito what not to do too.
Me, I’d rather have decisive leadership trying to do the responsible thing. Yeah, they might get a few things wrong along the way BUT there is action. For that I’ll struggle through with less tobacco and booze, I just don’t give an F.
SA has one of the highest alcohol abuse records globally and under lockdown it’ll be even worse.
Suck it up – this is not about the individual doing cold turkey. I think the Govt is doing a great job under difficult circumstances.

Major real world physical threats don’t need PR departments and censorship to convince people of their danger. They don’t need falsely inflated fatality stats achieved by flagrant manipulation of the data.

The fact that many of us on the forum are not as easily led by the nose as you are, does not mean that we are ignorant of the problem. People who put their faith in “benevolent governments who know what is best for you” are doomed to be sorely disillusioned.

This COVID is our problem, not the government’s problem. We know for sure that alcohol consumption encourages socializing and that is exactly what is discouraged.

Look at SA as a whole and the trends of alcohol consumption among the different segments of the population – very few oompies en tannies will enjoy a relaxing glass of wine at home without getting excited.

Let’s get real – we were born sober. It’s not a train smash to get our bodies accustomed to their intended alcohol free state of being.

Booze is not an essential and is far from being a constitutional right. To insist that the President choose the economy (money) over human lives is like asking for another Marikana “profits over human life” and the Honourable President is very well aware of that. Sober Up!!!

Hear Hear. Our people must use their time more creatively. The South African Liquor Brandowners Association must tighten their belts as other businesses are doing.

You serious? Since time immemorial societies have used different substances to numb the daily stresses. Nobody knows any history anymore? Just utterly stupid remarks about “oompies and tannies” now? No knowledge of finances, the impact of monetary policy, free markets, tax income sources? “The economy over human lives”, is it even possible to make a more ignorant statement? Wonderful choice: a few hundred die of a virus, according to present statistics, thousands die of starvation? Apparently many find the latter option to be more palatable, as they fear they might fall in the earlier group, but know they will not fall in the latter. How callous has society become.

End of comments.

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