Illicit trade killing economy
SANDOWN – The illicit trade market is estimated to cost the South African economy over R366 billion a year.
If it were not for tax evaders and rapid illicit trade, South African could have R36.5 billion at its disposal.
This is according to Yusuf Abramjee and non-profit organisation Tax Justice South Africa at its media briefing on the impact of illicit trade on 2 March at the Maslow Hotel in Sandown.
The briefing hosted a panel led by Abramjee, consisting of South African Revenue Services’ acting chief officer of customs and excise Beyers Theron, CEO of the Consumer Goods Council of South Africa Gwarega Mangozhe, head of core operations at the Lesotho Revenue Authority Makali Lepholisa and Interpol’s Turn Back Crime ambassador Andy Mashaile.
“We at Tax Justice SA believe that finance minister Tito Mboweni could have received more feedback on his 2020 budget had he gone one step further and utilised the resources that are currently been stolen from him by illicit trade,” Abramjee said.
The organisation estimates that more than R100 million per day in taxes were lost as a result of illicit trade last year – totalling just over R366 billion for the entire year. “We are not trying to tell the minister where to spend his money but we are telling him where he can go and find more money in these trying times.”
Watch as Tax Justice SA founder Yusuf Abramjee host a media briefing on the impact of illicit trade:
Theron added that illicit trade is an internationally recognised problem. “It is estimated that $650 billion [over R10.2 trillion] can be attributed to illicit trade internationally – that is about 7 per cent of all goods moving globally which ended up in the informal markets last year,” he said.
He noted that last year in South Africa the revenue authority seized goods amounting to R2.1 billion in just 5 036 seizures.
Mangozhe said that although goods such as tobacco, alcohol and fuel are quite common in the illicit market, clothing and food fraud seem to be more common recently. He added that this now puts a consumer’s health at risk, “You are now going to eat a product reporting to be the original brand owner’s product and that can actually compromise your health.”
Theron added that in terms of the clothing and textiles industry, apart from counterfeit garments, under evaluations are becoming of great concern. “For example, in the clothing and textile industry, we started working with businesses and looked at an undervaluation. We have found incidents where garments of clothing are being declared at $0.02cents [R0.31]. Now if you add the input cost of the manufacturing of that garment, there is absolutely no way that anyone can declare that type of value.”
According to Abramjee, the only way in which South Africa will be able to clamp down on illicit trade is through communication and coordination. “To fight this evil injustice, we decided late last year to launch Tax Justice SA as a non-profit organisation. With the help of the organisations and law enforcement, we can formally set up a five-point plan to combat tax crime and to stop criminals from looting SA.”
The plan is set out as follows:
- Lock up tax evaders
- Return the stolen billions to the South African people
- Redistribute the fund recovered to education
- Expose tax evasion across the economy
- Ensure that state authorities do their job.
Abramjee added that it is important to note that these are not victimless crimes. “The young, the needy and the vulnerable are suffering because the money that should help them is being pocketed by these criminal kingpins.
“Tax looters are robbing children of their future by pocketing money that was earmarked for education. The tax stolen in a single week will pay the salaries of 4 000 primary school teachers for an entire year.”
Mangozhe encouraged the community to get involved and report any suspicious behaviour. The consumer good council is set to launch an illicit trade desk whereby the public can report any incidents anonymously. “This rapid deployment of technology will shake the system in the world of illicit trade.”
Abramjee concluded, “We appeal to politicians, the business sector, civil servants to join us in the fight for a better South Africa.”
Related articles
https://staging.citizen.co.za/sandton-chronicle/252094/illicit-trade-spotlight-maslow-hotel-sandton/
https://staging.citizen.co.za/sandton-chronicle/189506/dangers-of-trading-in-illicit-products/
