Home South African Budget 2023: Focus on combating illicit trade, says Tax Justice SA

Budget 2023: Focus on combating illicit trade, says Tax Justice SA

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Finance Minister Enoch Godongwana must use his Budget statement on Wednesday to properly empower prosecuting authorities to combat criminals in illicit trade who steal R100 billion from South Africans each year.

Dozens of Saftu members marched to Parliament over illicit trade. File picture: David Ritchie, African News Agency (ANA)

FINANCE Minister Enoch Godongwana must use his Budget statement on Wednesday to properly empower prosecuting authorities in combating criminals in illicit trade who steal R100 billion from South Africans each year.

This is according to Tax Justice SA’s Yusuf Abramjee, who said that the NPA and the South African Revenue Service (Sars) were hollowed out during years of state capture to allow the ruinous looting.

“Despite the clear and urgent need to tackle tax evasion and illicit trade, our prosecuting authorities are severely underfunded and understaffed,” said Abramjee.

“They’ve been left ill-equipped to carry out their essential functions, and this has had a devastating impact on public finances.

“It’s clear that urgent action is needed to restore the capacity of these institutions so they can collect the money that will improve the lives of all South Africans.”

Abramjee said that while the nation is focused on the electricity crisis, it would be a costly mistake to ignore the menace of illicit trade.

“The industrial-scale theft being perpetrated in the illicit economy impacts every part of our lives.

“The R20 billion in tax revenue stolen this year by criminal cigarette barons would pay for solar systems to take 20 small towns off the Eskom grid forever.”

He further said that while kingpins in illicit trade amass vast fortunes, honest citizens are being denied the schools, hospitals, and essential services they deserve.

“Failure to address this issue will only lead to further economic inequality, increased poverty, and the erosion of public trust in government institutions.”

“Minister Godongwana should use his Budget statement on Wednesday to ensure prosecuting authorities are equipped to curb this menace. They must bring the looters to justice, take back their stolen wealth, and spend it on the people to whom it rightfully belongs,” he said.

According to the Alternative Information and Development Centre (AIDC), last year it was found that illicit financial flows and base erosion profit shifting have been called the “Achilles heel” of transnational corporations because they present a vulnerability through which the architecture of corporate impunity can be tackled.

“Through both the interrogation of the tax and economic frameworks governing our economies as well as the pursuit of grassroots-based action, we can begin to reclaim some of the wealth that is plundered by multi- and trans-national corporations operating in the Global South,” said AIDC.

The organisation said that in the face of a post-Covid economic slump and runaway inequality, even proponents of austerity and economic liberalisation like the IMF are now calling into question the vast sums of money lost to corporate corruption and tax evasion from the Global South, a phenomenon captured under the umbrella term of illicit financial flows and base erosion profit shifting (IFFs and BEPS).

“The rise of these illicit outflows has had a terrible impact on countries in the Global South.

“Many of these countries are heavily indebted at a time when raising more revenue for development is needed more than ever, especially when responding to the economic and social crises triggered by the Covid-19 pandemic.

“In countries like South Africa, billions of rand leave the country each year, destined for tax havens such as Dubai or Bermuda.

“At the same time, our public hospitals and clinics are being closed down due to a lack of funding,” said the AIDC.

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