Be Smart About South Africa

Harsh Lockdowns May have Opened a Can of Worms

South Africa could take years to dismantle the criminal networks that sprung up and benefited from a ban on the sale of alcohol and tobacco products during the country’s coronavirus lockdown, according to the head of the tax agency. The ban, aimed at managing the health impact of the pandemic, has allowed illegal operators to gain a foothold in the market, South African Revenue Service Commissioner Edward Kieswetter said Monday in an online address to tax practitioners. Many illegal and criminal operators have now “marketed themselves to previously honest smokers and drinkers,” he said. “They are now embedded in the supply chain and it will take us years to reverse the impact.” Tobacco and liquor remained readily available through the black market from when the ban first kicked in with the nation’s coronavirus lockdown on March 27. Producers and retailers complained the restrictions have resulted in thousands of job losses and encouraged illegal trade. National Treasury data show the government lost out on $568 million in alcohol and tobacco taxes in the first four months of the fiscal year. A 2018 report published by the country’s producer-funded Tobacco Institute showed South Africa was already one of the world’s biggest markets for illicit cigarette sales at the time.


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