JOHANNESBURG - The latest data shows that illicit goods account for close to $500-billion in global trade, representing a significant drain on the international economy.
In South Africa, illicit trade is estimated to cost the country R200-billion in uncollected taxes, putting further pressure on the economy.
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Finance Minister Enoch Godongwana says the scourge is also a threat to consumers and puts jobs at risk.
Consumer Goods Council of South Africa’s Abraham Nelson says about R67-billion in direct taxes are lost to government, while 87,000 direct jobs are at risk.
“We are seeing the development of an illicit economy which is operating parallel to the legal economy,” says Nelson.
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“The challenge that we have is that compliant businesses operating within the legal economy now not only have to compete amongst each other,” he adds.
“But they have to compete with the illicit market as well.”
Illicit traders enter the market with a clear advantage on price, which drives some consumers to support the industry.
While some of these goods enter South Africa through the country’s ports of entry, others are manufactured locally.
This deprives government of much-needed tax revenue, putting further pressure on the fiscus and its ability to fund service delivery.