Lifting cigarettes, alcohol ban makes business sense

Date: 04 August 2020 | Author: BLSA Category: Media Statements, News

As Business Leadership South Africa, we support the call on government to rethink its decision on the ban of cigarette and alcohol sales in order to steer SA’s economy back on path to recovery.

Despite its honest purpose, the unintended consequences of this ban have caused harm that far outweighs whatever positive outcomes it hoped to achieve.

A recent UCT study found that the ban on the tobacco products has done nothing more than fuel the illicit trade industry and the researchers called for its immediate repeal.

Furthermore, Crime Stoppers International, a non-profit organisation focusing on transnational crime,  last week also called for the tobacco sales ban to be lifted, noting that it had provided a huge stimulus to the illicit trade in cigarettes, which was already an unwelcome drain on the South African economy before lockdown.

During the lockdown, criminal syndicates have benefited from the ban as it has provided them with opportunities which have been at the expense of legitimate business activity and public safety as the products sold are unregulated.  Consumers rely on effective institutions and law enforcement to protect them from the risks of illicit goods.

“The lockdown has made it even more profitable to trade in illegal tobacco and alcohol products,” says Tebele Luthuli, managing director of Business Against Crime SA and director of policy and legislation at BLSA. “Supply and demand have meant that sellers can charge premium prices. This illegal practice has weakened the private sector’s contribution to employment opportunities and long-term economic growth. This will eventually undermine the rule of law and citizens’ trust in government.”

Luthuli says the bans have also led to a loss of tax revenue from the sale of cigarettes and alcohol which is instead diverted to illegal trade criminals who have taken full advantage. “Our government desperately needs every cent through tax revenue to curb this scourge and save lives, which will ultimately be used to build the shattered economy once this pandemic is over.

“The government needs to be flexible around the issue of the alcohol ban. We also welcome and support the recommendations from the South African Research Council calling for the lifting of alcohol ban, saying there is no extreme pressure on hospital beds set aside to treat COVID-19 patients,” Luthuli says.