The South African Revenue Service (Sars) is losing billions of rands due to illegal trade activities.
According to Tax Justice South Africa, Sars lost more than “R20 billion in tax revenue last year due to the illegal tobacco trade”.
In a statement, the organisation said that the R20 billion could have been used to further develop South Africa’s renewable energy sector and could have paid “for solar systems to take 20 small towns annually off the Eskom grid”.
“Tobacco has been at the forefront for many years of South Africa’s rampant illicit economy,” Sars Customs and Excise chief Beyers Theron told the organisation.
According to the research, In SA almost 15 million illegal cigarettes are smoked each day and “three out of four informal retail shops sell illegal products”.
ALCOHOL
The research also said that Sars loses around R6 billion in lost taxes each year due to the illegal sale for alcohol.
The organisation estimates that around “500 million litres of dangerous illegal alcohol is consumed in South Africa every year”.
“The illicit alcohol trade is completely unregulated, there are no restrictions on what criminals are selling or who they’re selling to. Not only does illegal alcohol often contain fatal levels of alcohol and toxic ingredients, but it also costs the country’s finances over R16 million every single day,” Tax Justice South Africa said.
R200 AND R300 BILLION LOST
SA loses between R200 and R300 billion in revenue due to criminal syndicates, according to the Sars.
In September, Sars Commissioner, Edward Kieswetter said that South African government and economy loses billions in tax revenue due to criminal syndicates that avoid tax.
“We are aligned with the Davis tax committee, which says the value at risk from syndicated crime is easily between R200 billion and R300 billion a year,” Kieswetter said.
“My biggest concern is a proliferation of syndicated crime. This is of more concern to me than little fires of tax revolt,” he said.
“Sars is significantly underfunded to make the investment in modern technology and data science required for us to make a meaningful impact,” he said.
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