BL Premium reports that according to a new report, the unintended consequences of an alcohol ban, which include the rapid rise of illicit liquor production and reduced tax revenue, far outweigh the efficacy of a prohibition.
The study was backed and paid for by the industry through US-based not-for-profit organisation Transnational Alliance to Combat Illicit Trades (Tracit), whose members include AB InBev and Heineken. Tracit, which aims to mitigate the economic and social damage of illicit trade, said emergency restrictions on alcohol production and sales have devastated a legitimate industry, jeopardising long-term employment and growth. Curbs also fuel a parallel underground market that harms the legal sector’s ability to rebound once restrictions are lifted. According to the report, which analysed restrictions in various countries, including SA, Mexico and India, the longer legal businesses are sidelined, the greater is the opportunity for illicit traders to capture market share and fortify demand for their untaxed, unregulated products. The R140bn liquor industry, which contributes 3% to SA’s GDP and is responsible for 1-million jobs, was dealt a serious blow and left fuming late in December when the government announced an immediate ban on alcohol, saying it was critical to reduce the alcohol-related trauma load on hospitals. This was the third such ban, after sales were prohibited in March and July, leading to a jobs bloodbath of about 165,000 workers. Sibani Mngadi of the SA Liquor Brand Owners Association claimed that the ban was a severe threat to the SA economy. “There is an enormous loss of taxation including VAT and excise, as well as the loss of jobs contributed by legal alcohol producers and merchants to the fiscus,” Mngadi said.
- Read the full original of the report in the above regard by Bekezela Phakathi at BusinessLive (paywall access only)
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