This economic mocktail tastes bitter
- South Africa
- AB InBev, Alcohol, Consol glass, Lockdown, Tobacco
- August 5, 2020
The alcohol ban really has gotten to the point of being ridiculous. The old saying of “cutting off your nose to spite your face” applies here.
On one hand, government runs around trying to attract investment. Failing that, we take out loans from international finance organisations to keep the country afloat.
On the other hand, we systematically destroy our sources of revenue, putting the fiscus under more pressure and forcing us to raise more debt while thousands of people lose their jobs.
If it sounds insane, that’s because it is.
Ramaphoria is starting to taste like cheap vodka
Ramaphosa’s entire presidency was built around trying to attract investment and fight corruption. As literally billions of Rands are diverted away from investment in South Africa and the black market for cigarettes and alcohol booms, it’s becoming increasingly difficult to believe in his message.
I’m obviously not in favour of people dying. I’m not suggesting human life isn’t important. I am however echoing the thoughts of many – this extended and draconian lockdown is indirectly killing many more people and ruining their lives through poverty. The cure is worse than the disease.
100,000 jobs and R18bn in revenue
That’s the cost that the liquor industry has estimated as a result of the prohibition on alcohol sales.
I’m not suggesting bars and nightclubs should be opened, but is it really so terrible to allow restaurants to serve one drink per customer? Or to let people buy and consume at home? Is government worried that your pet cat might catch Covid from you as you sip on your evening shiraz or single malt?
The liquor argument was made based on hospital trauma units filling up. Of course, if the police service had actually tackled drinking and driving and our violent culture over the past two decades, things might be different.
Unfortunately, this is all an academic debate, because…
…The money is gone
I don’t want to get into a philosophical debate around alcohol or the impact on the healthcare sector. The reality is that we have declared war on an industry that contributes 3% to our GDP.
Thankfully, SARS has at least done something intelligent by allowing the deferment of R5.1bn in excise taxes. Normally, excise taxes are based on liquor produced rather than sold, so this may well have been in the nail in the coffin if SARS hadn’t made the right call. How could the manufacturers be expected to pay tax on products they are banned from selling?
We can hardly be surprised that Consol Glass has suspended construction of a R1.5bn plant in Ekurhuleni. AB InBev has cancelled R5bn in planned investments. R6.5bn in investment and thousands of jobs that simply will not happen thanks to government.
Where does this end?
The tobacco industry is fighting against its ban in court. The liquor industry is trying to solve the problem through dialogue.
Perhaps they should both consult the taxi unions. The taxis seem to know how to get a result out of government.
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