Gambling is R1.1 trillion industry. Should it face sin tax, as VAT hike alternative?

CapeTalk’s Lester Kiewit speaks with Koshiek Karan, an investment banker.

Listen below:

Consumers in South Africa will almost certainly feel the financial pinch of a VAT increase in the future.

Government of National Unity (GNU) partners rejected the initially proposed 2% VAT increase, arguing the average South African would not cope.

One argument behind the increase is that it will lead to more people contributing to the overall tax basket.

However, Karan believes a better way to increase tax revenue is by introducing a sin tax on gambling and the lottery.

The gambling industry generated over R1.1 trillion in 2023 of which only a small portion went back into the fiscus.

Karan says that 'problem gambling' has increased by 500% in six years and 27% of these gamblers rely on social grants.

He recommends adding taxes or levies on profits and making gambling advertising more expensive.

A portion of this income should go towards player education and rehabilitation.

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“If you are exploiting a market, you should be willing to pay for that damage.”

- Koshiek Karan, Investment banker and financial activist

“You have got to go after the companies, not the players.”

- Koshiek Karan, Investment banker and financial activist

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