Restaurants and taverns traded in alcohol despite the bans

Flouting lockdown regulations has become almost as common an occurrence as the frequency with which the regulations themselves change. Whereas media coverage and public discourse focus mostly on personal protective equipment tender corruption, little has been said about new waves of organised crime that have flourished during the lockdown.

Anecdotal evidence shows that illicit trade and prohibited movement and sale of alcohol during lockdown levels three and four triggered this upsurge. The damage done from the ban on alcohol sales will be felt long into the future, both in the form of reduced tax revenue for the fiscus and in the manner in which illicit traders have entrenched themselves in the market.

While there has been some media coverage on taverns being raided or ordinary citizens being arrested for transporting small quantities of alcohol, very little light has been cast on the scale of the organised, illicit alcohol trade from the likes of restaurants and some other alcohol resellers.

It seems that an entirely new supply chain for alcohol has been created during the lockdown period. It is flourishing in suburbia, where police rarely seem to do checks.

The restaurant sector has been vocal about the effects that lockdown regulations have had on their businesses. While many restaurants had to shut down completely, some decided to flout the alcohol restrictions during levels three and four, and we’ve been told that some restaurants surreptitiously sold alcohol in teapots or by the bottle with food deliveries.


Alcohol provides a large income stream for restaurants, so this has serious implications for the country’s fiscus. These cash sales were not being recorded, which means no value-added tax or excise tax would be declared on that transaction, nor would this income be declared for the restaurant’s annual tax assessment.

Few restaurants were without alcohol supply, so what then of the suppliers? They must have still been distributing. Some say delivery trucks would arrive as usual and were not stopped by police.

The alcohol ban resulted in some restaurateurs selling their wine stock at up to 300% mark-up. 

It appears the alcohol supply chain was also rejigged during lockdown. Informal research has indicated that some restaurateurs and liquor suppliers combined their efforts and would drive in convoys to different cities. Some suppliers had moved their warehousing facilities to their homes for ease of movement without being watched or risking stops and searches. 

So intricate was this web, that they would have a leader car that would operate as surveillance for roadblocks by police. They would also split the stock among their cars, so if they should be stopped, then at least all their cargo was not taken at once. One transaction was noted to be in the region of R300 000 for a sole collection. That was not the only transaction that supplier made that week, one can assume. 

Where will that revenue be declared, if at all?

One restaurant owner noted that he made as much as R100 000 in a week due to his illicit trade in alcohol. None of that will be declared to the receiver.

Margins are also in question here. We have all heard the anecdotes of the illicit prices of alcohol, where a bottle of bottom-shelf whiskey that usually retails for R169 was selling on the black market for R700. All these are largely cash transactions so none of these sales will be recorded, meaning the seller pockets all the money.

This is a dire crisis.  It is tax fraud on a major scale. So many people are complicit. While there is sympathy for the loss of income for so many sectors in the economy, it is not, however, reasonable to break the law.

The tax year 2021 should be looked at with some scrutiny when it comes to certain declarations from businesses. This is a critical issue for the country’s fiscus, a national disaster in its own right. We hope that the relevant units within SARS will investigate this with the relevant law enforcement agencies.

It is a threefold tax problem: lost excise tax, undeclared VAT and unreported income tax. In a South Africa where our economy is already in dire need of economic resuscitation, tax revenue cannot be lost at such a prodigious rate. It is also imperative that proper policing is done. Alcohol is still being traded outside of the government mandated times and hours and resale prices highly inflated with sales mostly not recorded.

This is a collective exercise. Businesses are encouraged not to blatantly flout government regulations and rather to do business ethically and responsibly.

The views expressed are those of the author and do not reflect the official policy or position of the Mail & Guardian.

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Related stories

Biodiversity is crucial for South Africa’s food security

Farming must embrace sustainable, regenerative agriculture practices to secure our future

‘Where the governments see statistics, I see the faces of my friends’

Yvette Raphael describes herself as a ‘professional protester, sjambok feminist and hater of trash’. Government officials would likely refer to her as ‘a rebel’. She’s fought for equality her entire life, she says. And she’s scared of no one

Q&A Sessions: Frank Chikane on the rainbow where colours never meet

Reverend Frank Chikane has just completed six years as the chairperson of the Kagiso Trust. He speaks about corruption, his children’s views and how churches can be mobilised

Covid-19 stems ‘white’ gold rush

The pandemic hit abalone farmers fast and hard. Prices have dropped and backers appear to be losing their appetite for investing in the delicacy

Zuma maintains his true colours at Zondo commission

The former president’s escapades at the commission of inquiry into state capture are a far cry from Nelson Mandela’s response when summonsed to testify in the high court

Companies need to plan for the future through skills development

COMMENT: Businesses need to focus on the training the so-called soft skills needed to respond to an ever-changing environment
Advertising

Subscribers only

Q&A Sessions: Frank Chikane on the rainbow where colours never...

Reverend Frank Chikane has just completed six years as the chairperson of the Kagiso Trust. He speaks about corruption, his children’s views and how churches can be mobilised

ANC: ‘We’re operating under conditions of anarchy’

In its latest policy documents, the ANC is self-critical and wants ‘consequence management’, yet it’s letting its members off the hook again

More top stories

Shabnim Ismail bowls her way into the record books Down...

The night before Australia’s Women’s Big Bash League (WBBL) final, fiery South African fast bowler Shabnim Ismail lay awake pondering how...

Hawks make arrest in matric maths paper leak

Themba Daniel Shikwambana, who works at a printing company, was granted bail and is due to return to court in January

Andile Lungisa: Early parole for the house of truth

Disgraced Nelson Mandela Bay councillor Andile Lungisa calls for a change of leadership in the ANC immediately after being released on parole

War of words at Zondo commission: ‘Grow up Mr Gordhan,...

The cross-examination of the public enterprises minister by Tom Moyane’s lawyers at the state capture inquiry went on well into overtime on Monday evening
Advertising

press releases

Loading latest Press Releases…