{"id":773720,"date":"2024-05-30T10:30:00","date_gmt":"2024-05-30T08:30:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=773720"},"modified":"2024-05-30T10:09:41","modified_gmt":"2024-05-30T08:09:41","slug":"edward-kieswetter-kisses-r24-billion-goodbye","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/773720\/edward-kieswetter-kisses-r24-billion-goodbye\/","title":{"rendered":"Edward Kieswetter kisses R24 billion goodbye"},"content":{"rendered":"\n

A Gauteng High Court ruling barring the South African Revenue Service (SARS) from installing CCTV cameras at tobacco-manufacturing warehouses is set to cost it billions in tax revenue.<\/p>\n\n\n\n

South Africa has a booming illicit cigarette market where manufacturers and retailers do not pay excise and value-added tax (VAT).<\/p>\n\n\n\n

The SA Tobacco Transformation Alliance (SATTA) estimated that the lost tax revenue from the illicit cigarette trade was at least R24 billion in 2023.<\/p>\n\n\n\n

SATTA\u2019s research showed that South Africans smoked 37 billion cigarettes last year. However, SARS only collected taxes on 13 billion.<\/p>\n\n\n\n

The excise tax is around R1 per cigarette, which leaves South Africa with around R24 billion of lost tax revenue.<\/p>\n\n\n\n

These figures align with Tax Justice South Africa\u2019s Yusuf Abramjee\u2019s estimates that as much as 70% to 80% of the cigarettes sold in South Africa are illicit.<\/p>\n\n\n\n

He highlighted that the minimum collectable tax on a packet of 20 cigarettes is well above R20. However, many smaller shops sell these packs for as little as R10.<\/p>\n\n\n\n

Tax Justice SA estimated that more than R20 billion in tax revenue was lost in 2022 due to the illegal tobacco trade.<\/p>\n\n\n\n

With increased excise taxes, SATTA’s estimate of R24 billion in lost tax revenue from illicit cigarettes looks accurate.<\/p>\n\n\n\n

To address this problem, SARS planned to install closed-circuit television (CCTV) cameras at cigarette manufacturers\u2019 warehouses.<\/p>\n\n\n\n

SARS wanted to use these CCTV cameras to monitor the volume of cigarettes they produce and clamp down on illicit cigarettes entering the market.<\/p>\n\n\n\n

However, the Gauteng High Court in Pretoria stopped SARS\u2019s CCTV plans in its tracks. Judge Linda Retief interdicted SARS from installing the cameras.<\/p>\n\n\n\n

Retief’s ruling stated that there was no evidence that the cigarette manufacturers SARS was targeting weren\u2019t tax compliant.<\/p>\n\n\n\n

She added that the interdict against installing CCTV cameras would not prevent SARS from collecting tax.<\/p>\n\n\n\n

This ruling will make it more difficult for SARS to clamp down on the illicit cigarette trade in South Africa.<\/p>\n\n\n\n

Therefore, it is likely that SARS will continue to lose out on billions of tax revenue related to illegal cigarettes.<\/p>\n\n\n\n

Wider illicit trade is an even bigger problem<\/strong><\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

SARS\u2019s headache about lost tax revenue does not stop at the illicit cigarette trade. It extends to illicit alcohol, fishing, mining, counterfeit electronics, pharmaceuticals, food, and apparel.<\/p>\n\n\n\n

The revenue service estimated that illicit trade costs the economy R100 billion annually and robs the country of valuable resources.<\/p>\n\n\n\n

Business Unity South Africa (BUSA) said illicit trade is one of the biggest threats to South Africa’s stability and economic growth.<\/p>\n\n\n\n

SARS Commissioner Edward Kieswetter highlighted that illicit trade costs South Africa R250 million daily.<\/p>\n\n\n\n

Tax Justice South Africa\u2019s Andy Mashaile said this is not a victimless crime. \u201cTax dodgers are robbing South Africans of schools, housing, healthcare, and basic safety,\u201d he said.<\/p>\n\n\n\n

Tax Justice South Africa said criminals have been allowed to thrive due to corruption and complacency.<\/p>\n\n\n\n

Mashaile said problems of illicit trade and counterfeit goods go well beyond cigarette smuggling to dodge taxes.<\/p>\n\n\n\n

There are many examples of counterfeit medicine and food that have resulted in South Africans\u2019 deaths.<\/p>\n\n\n\n

\u201cCounterfeit baby formula which was manufactured in China killed 100 South African children,\u201d he said. The fake milk formula had virtually no nutritional value.<\/p>\n\n\n\n

\u201cPeople will be shocked by the amount of money which is made from selling illicit products and shopkeepers not paying tax,\u201d he said.<\/p>\n\n\n\n

\n\n\n\n

Read: SARS keeping an eye on international travel and high-end vehicles<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

The South African Revenue Service (SARS) was dealt a blow by the High Court, which will cost it billions annually.<\/p>\n","protected":false},"author":10,"featured_media":753291,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[19467,19923,3246,19922],"class_list":["post-773720","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government","tag-edward-kieswetter","tag-illicit-cigarette-market","tag-sars","tag-south-african-revenue-service-sars"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/773720","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=773720"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/773720\/revisions"}],"predecessor-version":[{"id":773942,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/773720\/revisions\/773942"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/753291"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=773720"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=773720"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=773720"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}