Finance minister says customs officials “must fulfil their duty to prevent criminals from dodging taxes”.

By Alani Janeke, senior journalist at African Farming and Landbouweekblad

The growth in the illicit trade in cigarettes and alcohol is threatening the economy and depriving the country of much-needed tax revenue.

“Each year, billions of rands in taxes go uncollected, funds that could have closed our revenue gap and avoided tax increases entirely,” said Enoch Godongwana, Minister of Finance, during his medium-term budget policy statement in parliament on Wednesday, 12 November.

According to the South African Revenue Service (SARS), government has lost about R40 billion to the illicit cigarette trade since 2020. The same is true for illicit alcohol and fuel, Godongwana said.

He added that government was cracking down on illicit trade. In the past six months, SARS has suspended the licences of three tobacco producers that failed to comply with legislation.

The Financial Intelligence Centre has provided SARS with reports to assist in investigations into criminal syndicates, he said. Together, they have identified illicit markets in tobacco, precious metals and fuel, as well as procurement fraud.

“Customs officials must fulfil their duty to prevent criminals from dodging taxes and flooding our markets with dangerous products,” Godongwana said.

The country’s tobacco and alcohol industries have been urging government for years to take stronger action against these illicit markets.

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