{"id":418863,"date":"2020-07-22T14:36:44","date_gmt":"2020-07-22T12:36:44","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=418863"},"modified":"2020-07-22T17:22:50","modified_gmt":"2020-07-22T15:22:50","slug":"south-africas-alcohol-and-cigarette-ban-will-remain-in-place-throughout-lockdown-government","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/lifestyle\/418863\/south-africas-alcohol-and-cigarette-ban-will-remain-in-place-throughout-lockdown-government\/","title":{"rendered":"Government clarifies &#8216;alcohol and cigarette sales banned throughout lockdown&#8217; tweet"},"content":{"rendered":"<p><strong>Update:<\/strong> Government has clarified that a tweet sent out earlier on Wednesday incorrectly stated that the country&#8217;s ban on alcohol and cigarette sales would continue &#8220;throughout lockdown&#8221;. The position is that these sales are prohibited under the current level 3 regulations, and are subject to change.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p dir=\"ltr\" lang=\"en\">1\/2:<br \/>\nThis account posted a tweet earlier today which said that the ban on the sale of alcohol and cigarettes would remain in place throughout the lockdown period. This is incorrect. The sale of alcohol and tobacco products is prohibited under the current Level 3 regulations.<\/p>\n<p>\u2014 South African Government (@GovernmentZA) <a href=\"https:\/\/twitter.com\/GovernmentZA\/status\/1285952302264848384?ref_src=twsrc%5Etfw\">July 22, 2020<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p><strong>Original story below:<\/strong><\/p>\n<p><span class=\"css-901oao css-16my406 r-1qd0xha r-ad9z0x r-bcqeeo r-qvutc0\">The ban on the sale of alcohol and cigarettes will remain in place throughout South Africa&#8217;s lockdown period, the government has said.<br \/>\n<\/span><\/p>\n<p>&#8220;The purpose is to save lives and protect the health and well-being of our people,&#8221; it said through its social media channel on Twitter on Wednesday (22 July).<\/p>\n<p>This is the first time that the government has provided an indication of how long the ban could last &#8211; although it has not officially been confirmed by a member of President Cyril Ramaphosa&#8217;s cabinet.<\/p>\n<p>The president reinstated the ban on the sale, dispensing and distribution of liquor on 12 July.<\/p>\n<blockquote class=\"twitter-tweet\">\n<p dir=\"ltr\" lang=\"en\">The ban on the sale of alcohol and cigarette will remain in place throughout the lockdown period.The purpose is to save lives and protect the health and well-being of our people. <a href=\"https:\/\/twitter.com\/hashtag\/AlcohoBan?src=hash&amp;ref_src=twsrc%5Etfw\">#AlcohoBan<\/a> <a href=\"https:\/\/t.co\/s2u7XOAeq6\">pic.twitter.com\/s2u7XOAeq6<\/a><\/p>\n<p>\u2014 South African Government (@GovernmentZA) <a href=\"https:\/\/twitter.com\/GovernmentZA\/status\/1285879006420762624?ref_src=twsrc%5Etfw\">July 22, 2020<\/a><\/p><\/blockquote>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<p>The president said that the government was forced to reintroduce the ban as hospital beds were being taken up by alcohol-related trauma cases.<\/p>\n<p>However, he said that this should be seen as a \u2018suspension\u2019 on the sale of alcohol \u2018for a while\u2019 to allow for the country\u2019s healthcare systems to focus on the coronavirus pandemic.<\/p>\n<p>\u201cIt is not a ban, it\u2019s a suspension to allow our health system to be able to cope,\u201d he said.<\/p>\n<p>The government has said that there is a clear <strong><a href=\"https:\/\/businesstech.co.za\/news\/government\/415841\/10-reasons-why-the-alcohol-ban-is-back-according-to-mkhize\/\" target=\"_blank\" rel=\"noopener noreferrer\">correlation<\/a> <\/strong>between an increase in hospital trauma cases and the reintroduction of alcohol sales.<\/p>\n<p><strong>Cigarettes<\/strong><\/p>\n<p>The sale of tobacco products, including cigarettes, has been prohibited since the country first introduced a lockdown at the end of March.<\/p>\n<p>The ban has been in place to protect the health of South Africans, according to submissions from government, and cigarette producers have failed to convince the country\u2019s courts that the sale of tobacco products is a necessity.<\/p>\n<p>Speaking through a <strong><a href=\"https:\/\/businesstech.co.za\/news\/government\/416759\/ramaphosa-on-south-africas-big-issues-including-closing-schools-and-why-its-not-a-ban-on-alcohol\/\" target=\"_blank\" rel=\"noopener noreferrer\">virtual Presidential Imbizo<\/a><\/strong> on the coronavirus on 15 July, Ramaphosa said that it is a \u2018complex problem\u2019 that government based on scientific advice.<\/p>\n<p>However, similar to his comments on alcohol, Ramaphosa said that this is not a \u2018ban\u2019 but rather a suspension that will be \u2018resolved\u2019 as the country moves to a lower alert level.<\/p>\n<p>Recent <strong><a href=\"https:\/\/businesstech.co.za\/news\/lifestyle\/418429\/south-africas-cigarette-ban-could-backfire-spectacularly-research\/\" target=\"_blank\" rel=\"noopener noreferrer\">research<\/a> <\/strong>by the University of Cape Town\u2019s Research Unit on the Economics of Excisable Products (REEP)\u00a0 shows that the ban may ultimately backfire.<\/p>\n<p>The REEP said that current regulations have opened up loopholes for illicit products to be distributed in South Africa, and have created an environment that will likely encourage smoking once the ban has been lifted.<\/p>\n<p>Being able to produce cigarettes legally for the export market, but not able to sell cigarettes in South Africa, has created a loophole and an incentive to sell illegally in the very lucrative local market, the REEP said.<\/p>\n<p>\u201cManufacturers will find it difficult to resist this temptation, especially because so many companies are selling cigarettes, despite the sales ban. Given the tobacco industry\u2019s long record of involvement in illicit trade, it is likely that they will divert cigarettes, ostensibly destined for the export market, to the local market,\u201d it said.<\/p>\n<p><strong>Jobs lost<\/strong><\/p>\n<p>South Africa&#8217;s alcohol industry bodies have said that the government\u2019s decision to halt sales, dispensing, and distribution of alcohol, will lead to job losses.<\/p>\n<p>The South African alcohol industry including the National Liquor Traders Council, South African Liquor Brand owners Association (SALBA), the Beer Association of South Africa (BASA), Vinpro, the Liquor Traders Association of South Africa (LTASA) and manufacturers said in a joint statement that the liquor industry has a wide and deep value chain employing almost one million people across the country.<\/p>\n<p>&#8220;The government\u2019s decision has serious economic consequences, placing hundreds of thousands of livelihoods at risk.<\/p>\n<p>&#8220;The hardest hit will be the significant number of smaller retailers and taverners. The immediate enforcement of the ban will have other unintended consequences which includes further job losses throughout the value chain,&#8221; the statement read.<\/p>\n<p>It said that during the 9-week lockdown, the alcohol industry lost R18 billion in revenue and R3.4 billion in excise tax (excise tax is lost from the growth in the sale of illegal alcohol products which don\u2019t pay taxes.)<\/p>\n<p><strong>Tax money lost<\/strong><\/p>\n<p>Speaking to 702 on Wednesday (22 July), SARS commissioner Edward Kieswetter said that the decision to ban alcohol and cigarettes has had a material impact on tax collection.<\/p>\n<p>While he said he couldn\u2019t go into detail around the valuation of the prohibition, SARS has seen a 51% decrease in excise collections in the current financial year, the equivalent of some R18 billion.<\/p>\n<p>Of this, cigarette and alcohol sales make up a significant portion, he said. The bigger problem, Kieswetter said, were the implications further down the line.<\/p>\n<p>If sales come to a complete stop over a longer period, the industry will face more job losses and the closure of smaller businesses and farms.<\/p>\n<p>The ban on the sale of alcohol and tobacco could be driving South Africa into an even deeper economic hole, said Bernard Sacks, tax partner at financial services company, Mazars.<\/p>\n<p>&#8220;One cannot ignore the effect that these drawn-out product bans are having on tax collections,&#8221; he said.<\/p>\n<p>Looking at the ongoing ban on cigarettes, Sacks said: \u201cAccording to my estimate, Treasury is probably losing out on around R320 million in uncollected VAT per month. In total, SARS is, therefore, losing in the region of R1.5 billion per month.<\/p>\n<p>\u201cAgain, this is not even the complete picture since the loss is even greater when you include factors such as the uncollected fuel levies, manufacturers\u2019 and supporting businesses\u2019 corporate profits, and personal income taxes that this industry normally generates.&#8221;<\/p>\n<p>\u201cWe are looking at about R13 billion to R15 billion if this continues until the end of the year,\u201d said Sacks.<\/p>\n<p>The tax expert noted that the revenue that Treasury will lose as a result of the reinstated alcohol ban will be even greater.<\/p>\n<p>\u201cIn the 2019\/20 financial year, SARS collected around R47 billion in excise duties from primarily alcohol and cigarettes.<\/p>\n<p>\u201cThe collections for this year were initially projected to be R48 billion. If one factors in a total ban on alcohol sales alongside the cigarette ban, the R1.5 billion monthly loss in taxes could be tripled.<\/p>\n<p>\u201cIf both of these bans are upheld until the end of the year, we are looking at total losses upward of R30 billion. Once again, that figure is solely a calculation of lost excise duties and VAT \u2013 it does not take other lost taxes into account. This shows us just how hard these product bans are hitting the country on a fiscal level,\u201d Sacks said.<\/p>\n<hr \/>\n<p><strong>Read: <a href=\"https:\/\/businesstech.co.za\/news\/business\/418745\/the-knock-on-impact-of-south-africas-alcohol-ban-and-how-it-could-be-challenged-in-court\/\" target=\"_blank\" rel=\"noopener noreferrer\">The knock-on impact of South Africa\u2019s alcohol ban \u2013 and how it could be challenged in court<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A tweet published by the government&#8217;s official Twitter account has indicated that the ban on the sale of alcohol and cigarette will remain in place throughout the lockdown period.<\/p>\n","protected":false},"author":10,"featured_media":406099,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9876],"tags":[26],"class_list":["post-418863","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-lifestyle","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/418863","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=418863"}],"version-history":[{"count":11,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/418863\/revisions"}],"predecessor-version":[{"id":418929,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/418863\/revisions\/418929"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/406099"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=418863"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=418863"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=418863"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}