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The South African liquor industry will resume excise tax payments this month after receiving a 90-day deferral in tax payments in July and August 2020 due to the second ban on alcohol sales.
However, industry players are questioning the continued restrictions around alcohol sales as the number of coronavirus cases in the country continues to decline.
Industry spokesman Sibani Mngadi said the alcohol industry plays a vital role in the country’s economy and could play an even bigger role in the post-Covid-19 recovery.
“Fortunately, there has been some normalization of business conditions to allow the industry to make this valuable contribution to the fiscus again,” he said.
However, he said the industry remains concerned that non-retail sales for domestic consumption have not returned to normal trading hours and days.
Under South Africa’s Level 1 closure regulations, sales in bottle shops are still limited to between 09:00 and 17:00 Monday through Friday, and sales are not allowed on Saturdays and Sundays.
“Like other grocery activities, non-consumer alcohol sales should not pose a risk for the spread of Covid-19 infections. The current trade constraints are a major constraint on the recovery of the retail sector and a handicap for shoppers who do not have the opportunity to shop after 5:00 pm and on weekends, ”Mngadi said.
Mngadi said that in 2019, the alcohol sector’s contribution to GDP was R179 billion, indirect taxes amounted to R72 billion (5.6% of total government revenue), and it provided work for 504,000 people.
The industry is an important generator of employment and it is estimated that for each position created in the sector, it maintains eight additional formal and informal jobs, he said.
“The ban on the closure of the alcohol trade caused severe financial strains in the industry, and recovery and normalization will take a considerable period of time, potentially years.
“An increase above inflation in excise duties in February 2021 would prolong the difficulties and negatively affect our recovery efforts. In fact, as a result of the current level of excise duties, the industry already generates disproportionately high revenue for the government, ”Mngadi said.
Mngadi said the industry has listened to President Cyril Ramaphosa’s call for a new social compact around addressing the problems of the illicit trade in alcohol, underage drinking, drinking and driving, and gender-based violence.
“The industry has already committed R150 million to a program of specific interventions that will address these problems, focusing on achieving significant behavior change in individual and community approaches to alcohol abuse.
“The sector is willing and can contribute significantly to the economic recovery of the country. To do this, you also need to secure the support and understanding of the government, ”he said.
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