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Were it not for unpaid taxes and increasing illicit trade in the country, over R12 billion could have been allocated to education, R6.5 billion to healthcare and R6.5 billion to community development in the last five months.
This is according to Tax Justice South Africa, who – along with the South African Revenue Service and the Consumer Goods Council – addressed media on Monday morning to highlight the impact of illicit trade. The organisation says by its calculation, R36.5 billion has been lost to illicit trade and unpaid taxes since October last year.
Put another way, according to that estimate, the billions lost in that time could have covered one year of the cost budgeted for free higher education; keep over 30 000 patients in intensive care for a week, based on an estimated cost of around R30 000 per day; or built the walls Prasa thinks will do away with vandalism.
SARS, for its part, has said the illicit economy costs SA an estimated R100 billion annually.
The media briefing, said Tax Justice SA founder Yusuf Abramjee, aimed to discuss ways to foster tax compliance.
"The illicit trade is denying us the ability to build a better South Africa for all. We are not trying to tell the minster [of finance Tito Mboweni] where to spend his money, but we are telling him where he can go and find more money in these trying times," Abramjee said.
Other speakers noted that illicit trade has affected multiple sectors, from textiles to fake food and even fake medication, which could place lives at risk.
Fake foods, fake medication
CEO of the Consumer Goods Council of SA, Gwarega Mangozhe, said fake foods are increasingly becoming popular.
"One of the things that we realised was that the illicit trade and counterfeiting was starting to pose a significant risk to economy audit in South Africa, but the other problem that this also poses is the consumer health risk.
"We are starting to see a rise in food fraud. You are going to eat a product purporting to be the original brand owner’s product and that can actually compromise your health," he said.
As a means to combat food fraud, the CGCSA has collaborated with various organisations such SAPS to stop syndicates at their tracks. The main products under watch will be tobacco, alcohol, foodstuffs, clothing and pharmaceuticals, which are also being counterfeited.
Faulty fashion
SARS Customs & Excise chief Beyers Theron, who was one of the speakers, made particular reference to the clothing and textile industry, among others.
"If you look at the international figures that talk to the magnitude of the problem of illicit trade, about $650 billion can be attributed to illicit goods, that talks to about 7% of all goods that move in the world and end up in informal markets that are not necessarily regulated as they should be.
"In South Africa, SARS has seized goods worth R2.1 billion over the past year until January in the normal line of business," Theron said.
Although Mboweni announced increases in sin tax of between 4.4% and 7.5% in his Budget speech last week, illicit traders will not bear the brunt of this.
Theron added that unethical product valuation in the textile industry threatens jobs and revenue in the country, as multiple firms are forced to close down. According to Theron, reputable retailers also play a role in the illegal revaluation of garments in order to benefit.
"We have found incidents where garments are being declared at 0.02 US cents; in South Africa it's 30c for a garment. If you take the input cost of manufacture for a garment, there is absolutely no way that anyone can declare at that type of value."
Theron says the textile industry would be seeing a dip in revenue for February given the paused shipping of goods into the country following the coronavirus outbreak.
