Shadow economy keeps SA boozing during lockdown

Ban on cigarettes and liquor costs state billions in lost taxes

Much of the scouting for booze and cigarettes takes place through WhatsApp groups under hashtags such as #ImAskingForSomeoneElse or #HelpingAFriendInNeed.
Image: Alaister Russell/The Sunday Times

Bootlegging has hit the suburbs as South Africans turn to technology, WhatsApp groups and bartering to keep themselves supplied with their favourite tipple while liquor stores are closed for the lockdown.

And an industry built on another banned product, tobacco, says the ban is keeping millions out of the government’s pockets.

The Fair Trade Independent Tobacco Association, which represents independent tobacco manufacturers, said the taxman would lose about R1bn in excise revenue this month from the ban of a legally made product.

British American Tobacco, which controls the bulk of SA’s cigarette market, said it contributed R13bn in taxes in 2019. “The cigarette ban will have unintentional consequences, including forcing 11-million smokers to search for outlets willing to defy the ban,” the company said.

Asked about arrests and seizures, police spokesperson Brig Vish Naidoo said: “A decision was taken not to provide blow-by-blow accounts of incidents and police actions.”

Much of the scouting for booze and cigarettes takes place through WhatsApp groups under hashtags such as #ImAskingForSomeoneElse or #HelpingAFriendInNeed.

A west rand community WhatsApp group in Gauteng offers Graça wine, which usually costs R50, for R300 a bottle, and a Glenfiddich 18-year-old scotch, which usually costs R1,300, for R1,800.

WhatsApp groups in Pretoria and Durban carry similarly inflated listings, with beer selling for up to R700 a case.

Bartering wine for cigarettes is also popular. A woman in Rondebosch, Cape Town, said she realised before the lockdown that cigarettes would be a good way of bartering.

“I bought boxes and boxes of cigarettes, let people in my neighbourhood know that I had stock and that I was willing to trade,” she said. She set her trade price at three packs of Peter Stuyvesant Blue for a bottle of good red wine.

A Pretoria man who is putting his drone to use for alcohol drops said breaking the law comes with risk, but he has to earn a living.

Charging R500 a delivery, he said he has made R9,000 since the lockdown started. “If I get busted I’m in deep trouble and will not only get arrested but lose my drone licence.”

He said his relationship with customers was based on trust. “I vet them very carefully. The customer, the supplier and I know the risks. Before a trade is done they hand over all their credit card details to me. That’s my insurance.

“If my drone is seized by the authorities while I’m doing a delivery for them, they cover the full replacement cost plus my bail.” His drone has a 7km range.

The man’s customers declined to comment, with one woman saying: “It’s got nothing to do with you or anyone else about how my husband and I get our wine.”

A Johannesburg woman said her WhatsApp group is being used to sell cigarettes and alcohol. “All the deliveries are done through middlemen, with people bartering cigarettes for wine and spirits. It’s clearly risky but people are desperate.”

Professor Cornè van Walbeek, director of the University of Cape Town’s research unit on the economics of excisable products, said excise tax expectations for 2020 were R14.5bn for tobacco and R31bn for alcohol.

In contrast to things like cars, where people can delay their purchases, cigarettes not consumed during the lockdown will not be made up after the lockdown, and the revenue will thus be lost forever.

Director of UCT’s research unit Professor Cornè van Walbeek

“In contrast to things like cars, where people can delay their purchases, cigarettes not consumed during the lockdown will not be made up after the lockdown, and the revenue will thus be lost forever,” he said.

An online petition calling for the ban on cigarette sales to be lifted has gathered more than 120,000 signatures.

Pretoria resident Bev Maclean, who started it, said that after smoking for more than 40 years it was a “nightmare” to have to stop overnight.

“We were not given enough time to buy enough to see us through this very stressful time. Law-abiding citizens are now, in desperation, being made into criminals by buying illegal cigarettes,” she said.

The South African Liquor Board Owners Association and the Beer Association of SA wrote to President Cyril Ramaphosa saying up to 40,000 people could lose their jobs if the lockdown liquor ban continued.

The association called on the government to allow bottle stores to trade subject to physical-distancing requirements and restricted hours. It also wants pubs and taverns to be given permission to operate as off-consumption outlets.

Ramaphosa’s spokesperson, Khusela Diko, confirmed the president had received the letter. “Government continues to assess submissions received and engage stakeholders on their concerns,” she said.

BY:Graeme Hosken

– Additional reporting by Mpumzi Zuzile

Source:TimesLIVE

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