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Is liquor industry's plea for tax break the start of 'unaffordable tax revolt'?

The industry wants excise tax payment deferred until the alcohol ban is lifted. Wide-ranging reaction on The Money Show.

South Africa's big liquor players want the payment of excise taxes deferred while the alcohol sale ban is in place.

The SA Liquor Brand Owners Association (Salba) says the re-imposition of the ban has left it no choice.

The group says says the industry pays the South African Revenue Service (Sars) an average of R2.5bn per month in excise taxes.

But alcohol companies have to pay the tax on end products which are sitting in their warehouses and can't be sold during the prohibition.

Bruce Whitfield interviews the Group CEO of Distell, Richard Rushton.

What we'll have is retailers who'll be sitting on stock, unable to potentially pay us, and then in turn us unable to pay excise to Sars.
Richard Rushton, Group CEO - Distell

We are allowed to produce stock. That stock is typically taxed at source, but it's reliant on a cash-flow process where the stock has been sold. In the absence of any sales, again, we are asking for deferral of any tax levied at source.
Richard Rushton, Group CEO - Distell

Clearly we don't know when this ban will end, so I think it's a reasonable request.
Richard Rushton, Group CEO - Distell

It's vital to find a balance to be able to support health care workers while at the same time keep the liquor industry moving, says Rushton.

Perhaps a more pragmatic and balanced approach is for off-sales to happen and for us to maintain a curfew; to stop on-premise sales. These are some of the recommendations that we had made in the lead-up to this most recent ban.
Richard Rushton, Group CEO - Distell

While the liquor industry is asking for a tax payment deferral, government has to look for ways to plug a huge tax hole.

Whitfield gets input from tax specialist Charles de Wet (partner, PwC South Africa) and economist Isaah Mhlanga (Alexander Forbes).

I think it [tax deficit] is growing by the day... The request by the liquor industry for concessions - is that the start of a tax revolt that we simply cannot afford at this point in time?
Charles de Wet, Partner - PwC

It would make sense for the sectors that government puts on hold... to give some tax breaks until they open up that economy.
Isaah Mhlanga, Chief Economist - Alexander Forbes

Listen to the in-depth discussion on The Money Show:

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