The South African Revenue Service is targeting a company that allegedly withheld millions in “plastic bag tax’’ paid over by consumers at shopping tills around the country, the Sunday Times reports.

The company, which supplies bags to Pick n Pay and other retailers, has been flagged by a whistleblower who accuses it of rigging the system to take almost R10 million a month ‘off the top’ which should have been paid to SARS.

There are also concerns that similar schemes are being run by other companies, with hundreds of millions of rands in outstanding environmental tax potentially owed.

Insiders with knowledge of the investigation confirmed that the taxman is now in talks with the implicated companies to settle the large tax debts uncovered so far. However, it is not clear whether SARS intends to lay any additional criminal complaints against them.

The plastic bag levy was introduced in June 2004, at a rate of 3 cents a bag on some types of plastic shopping bags, with the aim of reducing littering and encouraging plastic bag reuse.

The levy was increased to 4 cents a bag from 1 April 2009, 6 cents a bag from 1 April 2013, 8 cents a bag from 1 April 2016, 12 cents a bag from 1 April 2018 and further increased to 25 cents a bag from 1 April 2020.

The 2022 national budget proposes further increasing the levy from 25c/bag to 28c/bag with effect from 1 April 2022. The Budget Review also notes that an upstream plastic tax and a tax on single-use plastics will be investigated.

The country’s retailers are also beginning to slowly phase-out shopping bags altogether. Liberty Two Degrees (L2D), with a property portfolio including Sandton City, Eastgate and Melrose Arch, now has a ‘no plastic shopping bags’ policy in place.

Other retailers, including Pick n Pay, have also announced initiatives to phase-out harmful plastics.