NATIONAL NEWS - The billions of rand in interest that South Africans will have to pay on the R70-billion IMF loan highlights the complete irrationality of the ban on the legal sale of tobacco during the COVID-19 lockdown.
The crisis “Emergency Support” loan of $4,3 billion (approx. R70 billion) was taken by the government at an interest rate of 1% -- meaning law-abiding South Africans must finance tens of millions of rands in interest payments to the fund every single month.
The cost of this loan is about R700-million every year. That’s what we, as South Africans, must pay just for the right to borrow this money from the IMF. This doesn’t even include paying back an actual cent of the R70 billion.
That works out at around R2 million every single day at a time when South Africa desperately needs money to spend on vital public services.
Yet, because of the ban on the sale of legal tobacco, the government is losing R35-million a day in lost excise payments while criminals and illegal suppliers cash in.
Over the past 125 days of the tobacco sales ban, the South African government has refused to collect almost R4.5 billion in taxes on cigarettes. That is enough to pay for more than six years’ worth of interest on the IMF loan.
Just one day of tobacco excise revenue would pay the cost of the IMF loan for almost three weeks. This is the scale of the loss that the country is suffering.
Our government is going to the United States and borrowing emergency money at a cost of R2-million a day while putting itself in a situation where it is unable to collect R35-million a day in tobacco taxes.
Do the maths: The ban has been a huge mistake for South Africa -- and it needs to be lifted immediately.
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