The alcohol industry has welcomed the positive response from the National Treasury to its request for a deferment of excise tax on alcoholic beverages.

In response to the industry’s request, Treasury has proposed a 90-day deferral for the payment of excise taxes on alcohol to be made in August and September.

The deferrals will be effected through the Customs and Excise Act Rules to be published by South African Revenue Service (Sars).

South African alcohol industry spokesperson Sibani Mngadi said the sector had last month applied for the deferment of R5.1-billion in excise tax owed to Sars until the ban in sales is lifted.

“With the reintroduction of the ban on all alcohol sales with immediate effect from July 12, the industry and its entire value chain faced a crippling financial crisis,” he lamented, nodding that the sustainability of the sector, now and in the post-Covid-19 era, “was dependent on this deferment if further job losses are to be avoided”.

Mngadi said the money “is vital to the country’s economic future, and that the focus should now be on reviving the sector as quickly as possible”.

The industry had further also called for a more targeted approach in dealing with the problem of alcohol misuse and appealed to government to enter into discussions to implement targeted interventions to promote responsible consumption.

“The fact that the South African Medical Research Council is also calling for a lifting of the blanket ban on alcohol sales confirms our belief that there are better and more sustainable alternatives to the ban,” he added.

The industry shares the Government’s concerns regarding the Covid-19 pandemic and reiterated its commitment that it would continue to support efforts to curb the unprecedented health emergency.

In a separate statement on August 4, Business Leadership South Africa (BLSA) said that it supports the call on government to rethink its decision on the ban of cigarette and alcohol sales "in order to steer South Africa's economy back on the path to recovery".

BLSA noted that, "despite its honest purpose", the unintended consequences of the ban have "caused harm that far outweighs whatever positive outcomes it hoped to achieve".

It referred to a recent study by the University of Cape Town, which found that the ban on tobacco products has "done nothing more than fuel the illicit trade industry" and the researchers have since called for its immediate repeal.

During the lockdown, non-profit organisation Crime Stoppers International found that 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".

BLSA policy and legislation director Tebele Luthuli commented that "the lockdown has made it even more profitable to trade in illegal tobacco and alcohol products".

Luthuli added that the supply and demand has meant that sellers can charge premium prices, ultimately weakening the private sector's contribution to employment opportunities and long-term economic growth, which will "eventually undermine the rule of law and citizens' trust in government".

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, Luthuli lamented.

"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."