Illicit trading: a criminal activity that is robbing South Africa of billions of rands each year

Amongst the sensational revelations in Jacques Pauw’ book The President’s Keepers, about illegal activities involving President Zuma, was another very important revelation – that dirty money from illicit trading, in tobacco and other commodities, could be funding ANC factional campaigns.

It highlights the important need to fight this scourge of a rogue economy, which not only deprives the Treasury of billions of rands of tax revenues but also contributes to the appalling level of unemployment.

When the South African textile industry started experiencing a sharp decline in the late 1990s, as a result of cheap, illicitly imported textiles flooding the market, the SA Revenue Service (SARS) was urged to act, but it did not act on time and as a result the industry shrank from 210 000 formal sector jobs in the 2000s to 90 000 jobs currently.

Illicit trading has already caused the tobacco industry to lose around 700 direct jobs. If allowed to continue, it could have implications on the same scale as in the textile industry, if we are to include those who indirectly rely on tobacco sales such as traders and hawkers.

The illicit economy, including illegal the sale of tobacco products, counterfeit textiles, drug manufacturing and smuggling, illicit mining of gold and diamonds, ivory smuggling and the poaching of endangered species like abalone and rhino, is estimated by SARS to be costing the fiscus about 10% of GDP, or R300 billion a year.

In the case of cigarettes, these losses should be relatively easy to eliminate. The tax on a packet of 20 cigarettes, including VAT and excise duty, comes to R16.50, which means any packet going for less cannot possibly be legal.

Yet these products can be found – and are purchased in significant numbers – at countless corner stores and hawkers’ stands around the country.

The United Nations estimates that money flowing to organised crime outstripped all the money that the developing countries could devote to long-term development.

Illicit trading is a crime, it should be treated as such and proponents must face the full might of the of the law. Yet SARS is now exposed as not only failing to act against illicit traders but being actively involved on protesting them!

A shocking example in The President’s Keepers concerns Mark Roy Lifman, “often referred to as a ‘businessman-gangster’ [allegedly] linked to corruption, fraud, money laundering, drug trafficking, cigarette smuggling and transnational organised crime”.

His activities were being monitored by later-suspended SARS officials, Johan van Loggerenberg and Ivan Pillay and they were ready to take action to recover R350 million of unpaid taxes from Lifman, and even he seemed to have accepted the inevitable and was ready to pay.

After they were suspended, Lifman’s case was inherited in 2015 by SARS’ new head Tom Moyane.

“But”,write Pauw, “hold onto your seat because what followed next is nothing but sabotage of the national fiscus. And once again, somewhere on the horizon, hovers the figure of Jacob Zuma as well as his family.

“In April 2015, City Press said that Tom Moyane was approached to ‘go easy’ on Lifman as the businessman ‘is an important man because of his money and influence and his proximity to powerful people’. The City Press story has not been challenged or contested since its publication and the allegations, said the newspaper, were verified by four different sources.

“My sources told me that Lifman is known for his political connections and not [being] shy to flaunt and brag about them. In 2014, he was photographed by the Sunday Times at President Jacob Zuma’s birthday rally in Athlone, Cape Town, in the company of ANC provincial chairperson Marius Fransman. Lifman wore an ANC T-shirt (imported from China by another Zuma devotee) and had VIP access to the stage, which required clearance by Zuma’s bodyguards.”

What clearer evidence could there be that we have been ruled by a kleptocracy! This is money that should be going towards the building of roads, schools, hospitals, dams, railway lines and power stations. This is money that is being directly stolen from South Africans.

SAFTU urges government and SARS to get tough on illicit trading and ensure that our tax obligations are met in full so the country can create jobs and meet the developmental goals it has set for itself.

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