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SA alcohol ban costs economy R15.4bn in taxes – Distell

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SA alcohol ban costs economy R15.4bn in taxes – Distell

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3rd August 2020

By: African News Agency

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Multinational brewing and beverage company Distell said on Monday the alcohol industry had already lost 118 000 jobs while nearly 800 small and medium sized liquor manufacturers faced bankruptcy as a result of the South African government's ban on sales to try and contain Covid-19.

In a statement, Distell said industry figures showed the tax loss from the first six-week ban on alcohol sales alone came to R15.4-billion. If the ban remained in place for another nine weeks, an additional R13-billion would be lost to the fiscus.

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Last Friday South African Revenue Service Commissioner Edward Kieswetter told Bloomberg News that the country had lost R82-billion in tax revenue during a Covid-19 lockdown imposed from March 27, which initially shut down all social and economic activity except for essential services.

It also saw a ban on the sale of cigarettes and alcohol -- the latter being prohibited again after it was briefly allowed, with the government arguing this was necessary to avoid overwhelming the health system as it grapples with the coronavirus.

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On Monday Distell chief executive officer Richard Rushton questioned whether an outright ban on alcohol sales could be justified when the damage outweighed the benefits "and there are smarter ways to achieve the same objectives".

"The long-term damage will be immense – wine farms, restaurants, glass container manufacturers and taverners are all bleeding and many will not survive. We’re facing a structural decline in output capacity in an industry that supports almost one-million livelihoods and accounted for three percent of South Africa's gross domestic product in 2019,” he said.

Distell said the alcohol industry supported about 35 000 township small and medium enterprises and more than 180 000 unlicensed liquor outlets, with each tavern owner supporting another seven people.

For licensed tavern owners alone, that amounted to 192 000 township livelihoods impacted by the ban and 76 000 jobs already lost.

Ironically, the company added, the ban punished licensed, compliant tavern owners while the illicit market continued to thrive, undoing a decade-long drive to formalise the sector and bring it into the regulatory fold.

"We understand the government’s duty to ensure there are enough hospital beds to meet the expected need during the peak of the pandemic,” Rushton said.

"But the economic consequences of a ban are likely to cause more suffering down the line, in terms of hunger and hardship, than it can possibly prevent now.There are alternatives to an outright ban which we’d like to discuss with the government ... It doesn’t have to be one or the other."

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