Finance minister Tito Mboweni has said that he is against the government’s decision to continue with the ban on alcohol and cigarette sales as the country shifts from level five to level four of the lockdown.
At the same time, Sars commissioner Edward Kieswetter told MPs that the taxman so far lost has lost about R1.5bn in tax revenue that could have been made from the sale of alcohol and tobacco since the lockdown began on March 25.
Replying to questions during a combined virtual meeting of parliament’s different finance committees, Mboweni highlighted that he if he had the power to do so he would have allowed the sale of alcoholic beverages and tobacco products but he has to support the decision made by the cabinet collectively.
“I didn’t like the continuous ban on tobacco and alcohol but I did not win the debate and therefore I have to accept the decision,” Mboweni told MPs from the National Assembly and the National Council of Provinces.
“I know I’m losing a lot of revenue and at the same time am under pressure to spend but however that’s a decision of cabinet and I have to obey if l want to (continue being) a member of the executive. If you can’t obey you must leave, so one has to fall in line in that regard.”
Mboweni also sayed that the National Treasury and the tax revenue service were anticipating tax revenue collection to decrease “by some 32% or more” as the coronavirus continues to damage the economy, which will lead the government to end up borrowing more money to finance its spending programmes.
Kieswetter said Sars was so far R13bn down on revenue due to a crippled economy and this was likely to worsen due to the effect of Covid-19.
“This is caused mainly by VAT, excise, by import duties and by pay as you earn and I have to highlight that this will get extremely worse once the tax relief measures start because that then introduces further postponing of some of these payments, and so we expect a great decline in tax revenue purely caused by the state of the economy as well as the tax relief measures that government has announced.”
Kieswetter said when it comes to 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 show 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 as of date our under-recovery from these activities is one and a half billion and all this is fromthe first month,” said the tax chief, while he went on to say that they were worried that the illicit trade was blooming during the lockdown.
In regards to the government’s decision to approach the IMF for a US$4.2bn loan facility, Mboweni said government would do so without going into any discussions on conditionalities with the global finance institution.
There have been worries in some political quarters that looking for a loan from the IMF would jeopardize the sovereignty of SA.
“We’ve not begun any negotiations, because it’s a long process which will take a number of weeks to get into. We’ve not closed the door, it’s something we should consider.
“Will there be any conditions attached? My understanding is, that there won’t be any conditions attached. In fact I’m not willing to. discuss any conditionalities with the IMF.
“We know what our economy wants and we’ll do what need to be done ourselves, so I’m not interested in discussions on conditionalities.”