Illicit Liquor ‘Robs’ BURS Of Millions

Government is losing money in uncollected alcohol taxes
Government is losing money in uncollected alcohol taxes

While law enforcement officers patrol ungazetted entry points, it has come to the fore that a huge amount of alcohol still enters the country through the borders, running the tax collector into heavy losses.

Tax experts have seen this as a sign that the government is losing huge sums of money in uncollected tax due to the porous systems at the borders.

“There is a lot of alcohol coming into the country. This is despite that law enforcers are all over the borderlines. The police and the Botswana Unified Revenue Service (BURS) continue to make arrests of people with large amounts of alcohol they cannot account for and investigations have shown that most of these come in through the borders,” a source said.

“There is no thorough searching, collusion takes place hence so much alcohol enters the country undetected. This is worrisome as it shows many other goods go undetected at the borders leading to loss of revenue running into millions.”

Tax specialist, Tumelo Rannau of The Tax Platform said for alcohol smuggled from countries outside Southern African Customs Union (SACU) such as Zimbabwe and Zambia, there is loss of excise, value added tax (VAT), customs duty and alcohol levy while from SACU members loss is only concerning VAT and alcohol levy.

“The goods are normally smuggled at ungazetted points because the border controls are not tight and sometimes they go undetected at gazetted points,” he said.

“A loss per litre of alcohol from an excise, VAT and alcohol levy perspective may range from P100/litre to P200/litre depending on the alcohol percentage of the product. More loss is in wines and spirits as they carry high percentages of alcohol. This goes into hundreds of millions [of pula] in losses as 10 million to 15 million litres of alcohol are consumed (or sold) monthly.”

Rannau added besides smuggled alcohol, the illicit liquor trade mostly thrives on alcohol brands that are usually not available for sale in the country and for some cases the stock was stolen from retail suppliers such as bars, wholesalers and bottle stores.

“As these products are sold on the black market, there is loss of revenue in VAT, which is normally collected by registered suppliers such as wholesalers, bars, and bottle stores. Additionally, since distributors and manufacturers cannot sell their stock during the ban. There is also loss in VAT from these suppliers as VAT only kicks in when there is a sale from legitimate suppliers. This could range from tens of millions per month in relation to VAT. Revenue earned by BURS for administration purposes is on commission basis and fewer collections for them means less revenue earned by the Authority,” he said.

Rannau said improvement of border controls both at gazetted and ungazetted points can help in curbing the illicit market. He said thorough searches at points of entry such as airports should also be done as some may take advantage of lapses at checking points and smuggle alcohol into the country.

“Opening the licit market will also help, as people will now go back to their normal drinks sold at legitimate dealers. The relevant authorities involved in border controls such as police and customs officers should also be capacitated by availing resources such as sniffer dogs and be trained on identifying counterfeit products,” he said.

Botswana Police Service spokesperson, assistant commissioner Dipheko Motube said they continue making arrests of people selling alcohol despite the ban.

“We continue to arrest a lot of people along borders in the bushes and other areas and they fail to account for where they got it. We continue registering many cases with many being of people arrested along the Ramatlabama to Ramotswa borders. We arrest some within the country with lots of alcohol after failing to account for where they got the alcohol,” he said.

Efforts to get a comment from BURS proved futile as the general manager-communications, Mable Bolele had not responded to questions sent to her by press time.

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