The Effect of South Africa’s Alcohol and Cigarette Ban
In March 2020, South Africa initially imposed a 21-day national lockdown to contain the spread of COVID-19. However, as more information became known about the virus and cases kept rising, the South African government realized that the lockdown may need to be extended and that they would need to place a ban on alcohol consumption and cigarettes. Since COVID-19 primarily attacks the lungs, and tobacco products reduce lung capacity, smoking can make it harder for the body to fight off the virus while increasing the risk of respiratory infections. Thus, to improve the survival rate, the government figured it would be a smart move to limit the sale of cigarettes. On the other hand, alcohol was seen as a driver of emergency hospital visits, and its ban was needed to free up bed space.
Of course, the ban was not met with approval. South African citizens were heavily against it, and the liquor and tobacco industry was not happy either. This has affected the economy as well since the sin tax is a significant earner for the government. In fact, the country lost R9.5 billion in alcohol and tobacco taxes in the first four months, while the figure increased to R12 billion when the South African Revenue Service (SARS), the country’s tax collector, took into the downstream taxes.
Even before the pandemic, South Africa had a thriving black market for cigarettes, so it was natural that the ban only made it more lucrative. Researchers found that while 90% of smokers were still able to purchase cigarettes during the ban, the average price rose to nearly 250% higher than pre-COVID prices. The ban also held back investment projects worth at least R12.8 billion from companies like Heineken, South African Breweries, Consol Glass, and Distell. Although the bans were necessary, South Africa will feel the ramifications of the ban in the near future. Officials fear that the illicit cigarette trade will continue even after the pandemic is over and that it could take years to recover.
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