Latest news with #R20bn
IOL News
3 days ago
- Business
- IOL News
South Africa's illicit trade crisis: Tobacco, alcohol, and fashion industries under siege
Illicit trading has emerged as a staggering threat to various industries in South Africa, with the black market for both cigarettes and alcohol reaching unprecedented levels. Illicit trading has emerged as a staggering threat to various industries in South Africa, with the black market for both cigarettes and alcohol reaching unprecedented levels. Illicit trading has emerged as one of the most pressing issues facing South Africa, pervading various sectors of the economy and costing the nation billions in lost tax revenue. At the forefront of this crisis are illicit cigarettes, now reaching record high levels in terms of market presence. Research conducted by Ipsos reveals a shocking statistic: more than 76.7% of shops across the country now sell cigarettes below the minimum tax threshold applicable on a standard pack of 20. This trend coincides with Finance Minister Enoch Godongwana's aim for the South African Revenue Service (SARS) to collect an additional R20 billion in tax revenue for the financial year, an effort aimed at circumventing new tax measures in the upcoming 2026 budget. Johnny Moloto, Area Head of Corporate & Regulatory Affairs for BAT South Africa, stressed the urgency of the situation. 'With the clock ticking for SARS to collect at least an extra R20bn, these results from Ipsos show the need for immediate steps to plug the leaks in tobacco tax collection,' he emphasised. Moloto further revealed that the illicit cigarette trade costs the country an estimated R28bn annually, equating to R100m lost every working day, surpassing SARS's entire additional collection target. 'Despite increased enforcement activity over the past year, including more raids and product seizures, illicit products remain as available as ever, suggesting that current tactics are failing to address the root causes of tax evasion. Our analysis indicates that the illicit cigarette trade costs South Africa approximately R28bn annually – R100m every working day – representing more revenue than SARS's entire additional collection target. Eliminating this leakage would protect law-abiding taxpayers from bearing additional tax burdens,' said Moloto. While illicit cigarettes have been noted as a growing concern, the Drinks Federation of South Africa (DF-SA) released new research revealing a sharp increase in the illicit alcohol market, which has grown by 55% in volume since 2017. Conducted by Euromonitor International, the research highlights the growing threats illegal alcohol poses to public health and safety, as well as the significant loss of national tax revenue. 'This study is a wake-up call. Communities are being exposed to harmful, unregulated alcohol, and the country is losing billions in revenue. It is urgent that government, industry, and civil society work together to tackle this issue head-on,' warned Dr Shamal Ramesar, Head of Research at DF-SA. Ramesar urged collaboration among government, industry, and civil society to tackle this pressing issue effectively and further called for coordinated action to promote responsible consumption, shut down illegal producers, and raise public awareness regarding the inherent dangers of illicit alcohol. Eustace Mashimbye, CEO of Proudly South African, also highlighted how the prevalence of these illegal practices is crippling the already-stressed local fashion industry. 'For the local fashion industry, illicit trade has domino effects: It leads to job losses in the value chain of the fashion industry, distorts the market by forcing local producers to compete unfairly with illicit traders who incur lower production costs, encourages widespread copyright infringements, deprives the creatives of their hard-earned revenue, compels legitimate entrepreneurs to compete with illegal traders who sell similar but substandard products without complying with safety, health or environment-related requirements, breeds precarious employment where labour regulations are disregarded, deprives the fiscus of much-needed tax revenue, and puts downward pressure on wages and salaries in the fashion industry labour market,' Mashimbye stated. In light of these challenges, industry leaders rallied to march on behalf of the fashion sector, submitting memorandums to the Department of Trade, Industry and Competition (DTIC) and the National Clothing Retail Federation (NCRF). These memorandums were a clarion call for authorities to intensify efforts against counterfeit goods to safeguard jobs and local production. At the Buy Local Summit and Expo, Mashimbye expressed the importance of protecting South Africa's invaluable fashion industry, estimated to be worth over $11bn (R197bn). 'We not only have a moral obligation to protect the sector; it makes economic sense to do so,' he said. In its commitment to combat the increasing threats posed by illicit trade, SARS has reiterated its dedication to revenue collection and facilitating legitimate trade. According to the agency, the illicit economy undermines the rule of law, erodes public trust, and enacts a substantial toll on national security. 'The illicit economy is a global phenomenon that threatens South Africa's society, economy, and national security. Tax evasion, smuggling, illegal transactions, illicit manufacturing, and fraud undermine the rule of law, erode public trust, distort markets, deprive governments of revenue, and enable corruption and organised crime. The pervasiveness of these illicit activities in our country demands that all enforcement agencies work jointly to curb their harmful practices. The illicit economy is complex and requires a whole-of-government response among public entities, the private sector, civil society, and international partners.' SARS revealed it is working with other law enforcement agencies to combat the scourge of the illicit economy. Saturday Star
TimesLIVE
11-07-2025
- Politics
- TimesLIVE
Zuma pops up in court to support Khanyile on incitement charge
In a week marking the fourth anniversary of the July 2021 riots, former president and MK Party founder Jacob Zuma turned up at court in Durban for the trial of one of the alleged instigators of the unrest, Bonginkosi Khanyile. Khanyile was appearing on the fifth day of the trial at the Durban high court on Friday. He is facing charges of incitement of violence and contraventions of the Disaster Management Act related to the civil unrest which claimed more than 350 lives and caused an estimated R20bn in damages. He is alleged to have been among the main instigators of the riots which erupted in KwaZulu-Natal and Gauteng after Zuma's arrest for contempt of court. In a video that is part of the state's evidence and was played in court, Khanyile allegedly called for Zuma's release and could be heard telling a group of people: 'Those who are burning the country must continue. Those who are closing roads must continue until Msholozi is released.' The defence claims those remarks were a political statement, not a call to action. During a brief appearance on Friday, defence lawyer Sizwe Cele cross cross-examined the fifth state witness, Brig Msizi Nyuswa from the Hawks. Nyuswa confirmed he came to the conclusion that Khanyile's remarks constituted incitement and asked for the case to be registered and sent to Director of Public Prosecutions (DPP). Asked if he knew when the video taken as it did not show any dates, Nyuswa said he couldn't answer that, as such information did not fall under his scope. He added the relevant people would be able to provide an answer. Cele had no further questions when it emerged Nyuswa couldn't answer questions on two documents presented by the state — a summary of instability incidents and a statistics database of cases that were opened related to the unrest — which fell under the detective services, which was not his unit. The state has thus far led the evidence of five witnesses. The case was postponed to September 29 for further state evidence. After the adjournment Zuma said he would continue supporting Khanyile but refused to comment about the anniversary of his arrest and subsequent unrest. Neither he nor Khanyile would be drawn on statements by provincial police commissioner Lt-Gen Nhlanhla Mkhwanazi whose explosive allegations about police minister Senzo Mchunu and other senior cops has landed him in hot water. On Thursday, MK Party MP David Skosana opened a criminal case against Mchunu and deputy national police commissioner Shadrack Sibiya for obstruction of justice, abuse of power and conspiracy to undermine investigations related to Mkhwanazi's allegations. Outside court MK Party head of presidency Magasela Mzobe called on party members to join the public march to support Mkhwanazi in Durban on Tuesday. Mzobe commended Mkhwanazi's courage. 'Mkhwanazi works like us. He has a way of dealing with criminals in a language they understand. You will just hear reports that there was a shoot-out with the police. His men are well trained,' he said. 'He was instrumental in KZN having elections without violence last year. We should support him because he is our friend but we know that when we're in the wrong he will arrest us. We must not kill each other because he deals with everyone. It's just that the criminals are all on that one side (party) so that's why it looks like he is targeting them for now.' Zuma did not address MK Party supporters gathered outside court, citing another engagement — the party's annual youth golf development event at the Royal Durban Golf Club.
IOL News
08-07-2025
- Business
- IOL News
Local manufacturers fuel illicit cigarette trade in South Africa, warns BAT
As much as R28 billion in annual tax revenue was being lost to illicit trade, exceeding the South African Revenue Service's (Sars) entire additional collection target of R20bn. Image: Supplied Tawanda Karombo British American Tobacco South Africa (BATSA) has pointed the finger at local manufacturers for exacerbating the illicit trade in cigarettes. Their claims come on the back of a study released by the company, shedding light on the alarming prevalence of illegal cigarette sales in the country. This issue, which was once largely perceived as a cross-border problem, has now morphed into a serious domestic challenge that threatens the economy and public health. Speaking after the release of a BATSA-commissioned study into the pricing of tobacco cigarettes in South Africa on Tuesday, Johny Moloto, the company's head of corporate and regulatory affairs said illicit trade in cigarettes was now a domestic concern for the country. 'This is no longer just a cross-border issue. This is a homegrown crisis, fueled by local manufacturers who continue to operate with impunity while the state loses billions in revenue,' said Moloto. Illicit trade in tobacco cigarettes is worsening in South Africa, with over 70% of retail outlets selling the products below the mandated minimum tax price. Commissioned by British American Tobacco (BAT) and independently conducted by Ipsos, the 2025 report outlines alarming national trends in the illegal tobacco trade, identifying South African manufacturers as the primary culprits behind the growing black market. Conducted by Ipsos, the Cigarette Retail & Wholesale Price Research report reveals that 76.7%, up from 27.4% in 2022, of South African retailers were now 'selling cigarettes below the minimum' tax threshold. As much as R28 billion in annual tax revenue was being lost to illicit trade, exceeding the South African Revenue Service's (Sars) entire additional collection target of R20bn. 'Despite increased raids and product seizures over the past year, illicit cigarette availability has continued growing, indicating current strategies are ineffective. locally manufactured brands continue to dominate the market for products selling below Minimum Collectable Tax price,' noted the report. According to the Customs and Excise Act, the Minimum Collectable Tax price for a box cigarettes in South Africa should sell for above R26.22 a pack after accounting for levies. However, results from the survey show Gold Leaf Tobacco Company as having the highest prevalence of products purchased, accounting for 43% of total outlet sample universe. Within the portfolio of the Gold Leaf Tobacco Company, 78% of products purchased retailed for R20.00 a pack and below whilst 89% of products purchased. BATSA had the second-highest prevalence of products purchased accounting for 13% of the total outlet sample. 'Within the BATSA portfolio of products purchased, 1.0% of portfolio products purchased retailed for R20.00 and below whilst 1.5% of the products purchased retailed for under the Minimum Collectable Tax of R26.22 and below,' notes the Ipsos report. It added that Afroberg had the third highest prevalence of products purchased, accounting for 8% of the total outlet sample. Within the Afroberg portfolio of the product purchased, 92% of portfolio products purchased retailed for R20.00 and below, whilst 96% of products purchased retailed for under the Minimum Collectable Tax of R26.22 and below. The study disclosed that 'the most common retail price was R10, found in nearly 1 in 5' transactions. It further noted that of the 23 manufacturers identified in the illicit chain, 14 were based in South Africa, accounting for 91% of the illicit stock.
TimesLIVE
23-05-2025
- Business
- TimesLIVE
Government spending plans hinge on tax agency hitting target, finance minister says
SA will need to slash spending if its tax agency does not meet its revenue collection target this year, finance minister Enoch Godongwana says, as the government focuses on keeping rising debt under control. Godongwana was speaking after making only minor adjustments to the government's spending plans and deficit projections in a third budget presented to lawmakers on Wednesday. His two previous attempts were scuppered by disagreements within the ruling coalition, chiefly over since abandoned plans to raise value added tax, that had rattled investors' confidence. Speaking to Reuters in an online interview on Thursday, Godongwana said the government did not expect to overshoot on spending. He said if the SA Revenue Service raises more than its target of R1.9-trillion in the fiscal year that ends in March 2026, there will be no need for R20bn in additional taxes pencilled in for the 2026/27 fiscal year. However, if that target is not met, "we will have to cut expenditure substantially", he said. Godongwana said the higher debt peak of 77.4% of gross domestic product that featured in his new budget reflected weaker economic growth forecasts rather than extra borrowing. Debt would peak this year, he maintained, saying doubters predicting further slippage were wrong. Financial officials will decide in July, after the SA Reserve Bank signs off its accounts, whether to draw on gains in its Gold and Foreign Exchange Contingency Reserve Account, which it started tapping last year to limit borrowing. Godongwana said friction within the coalition government over the budget had, meanwhile, eased. He said: "That noise has been exhausted. Everyone understands we have to get on with the work."
The Herald
21-05-2025
- Health
- The Herald
R20bn to hire 800 doctors
The government has set aside more than R20bn to save thousands of jobs in the public health sector, including hiring 800 more doctors. This was announced by finance minister Enoch Godongwana in the National Assembly on Wednesday when he tabled his latest version of the 2025/2026 budget, dubbed budget 3.0. He told MPs R20.8bn would be added to the budget of the health department in the next three years, or the medium-term expenditure framework (MTEF). Government has recently come under fire for not hiring unemployed doctors who have completed their community service while there are serious staff shortages at state hospitals around the country. The unemployed medical graduates recently resorted to a protest to highlight their joblessness. 'The health sector is provisionally allocated R20.8bn to cover compensation and essential services. This funding will facilitate the employment of 800 doctors who have finished their community service, safeguard about 4,700 health posts and address shortages in medical goods, services and accruals.
