Could Tax Stamping save Africa from Health and Revenue Collapse?

The high demand for cheap alcohol has fueled an illegal alcohol industry that is hugely problematic for governments and legitimate stakeholders in the alcohol industry.  This affects other areas as well, such as pharmaceutical, dry food and cigarettes. The most pertinent side effect for manufacturers and governments would be revenue loss, for the consumer it would be health.

“Tax Stamping solutions could replace declining Government revenue and assist in fighting counterfeiting” – Kyle Parker, Pagemark Africa

Manufacturers and governments feel the effects of this transgression in their revenue source. Tax stamps are becoming more widely used by governments; in 2013 approximately 81 countries worldwide used tax stamps. According to research done by the Canadian Tobacco Control Research Initiate, an anti-illicit trade strategy that incorporates tax stamps, track and trace, licensing and enforcement is the most effective way to manage the so-called ‘sin’ taxed products.

In Africa, revenue loss from oil production has dropped significantly. Recently the Nigerian Government initiated a clamp down on duties and Tax Stamping in order to boost other forms of revenue generation.  In the same initiative, Nigeria expressed concern over loss of income from counterfeiting. Managing Director of the International Monetary Fund (IMF), Christine Lagarde completed a three-day visit to Nigeria recently and was quoted as saying “Clearly what has happened is that the revenue of the Nigerian government has been significantly affected by the decline of oil prices. The fall of oil prices have reduced, not only just the revenue, but it has reduced the entry of foreign currency in the country”

In the SADC region, it is estimated that the loss in tax revenue due to illicit cigarette trade includes:

  • 23 % of total consumption in South Africa
  • 12% to 15% of total consumption in Namibia
  • 1% to 2% of total consumption in Mozambique
  • Minimal proportion in Zimbabwe.
  • 10% to 13% of total consumption in Zambia
  • 10% to 12% of total consumption in Swaziland

This equates to substantial loss, and a great concern in the health of those consuming or using these products. Effects range from excessive vomiting and headaches to breathing difficulties, blindness, seizures and even death

Pagemark Africa, an African based supplier of software, marking and authentication technologies, provides the following advice to manufacturers and government:

  • Manufacturers can implement reward and loyalty programs. If consumers scan the 2D code on the alcohol bottle and provide pertinent information, consumers could be rewarded depending on local regulations. When fake codes are scanned, the geo-location of these codes can be identified for further enquiry by law enforcement.
  • Using Pelta™ and our patented technology, the covert 2nd layer is encrypted and is uncopiable. Since counterfeiters are unable to copy the secure code, law enforcement may be able to identify the fake alcohol and confiscate it during raids – before it even reaches the consumer.
  • When alcohol is stolen in transit, the unique serialized numbers of the stolen batch can be signaled on the system. When law enforcement scans the codes during searches or raids, they would immediately be able to establish that the alcohol found was part of a stolen batch.

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