JOHANNESBURG - The Black Tobacco Farmers Association (BTFA) said it was dismayed by government's decision to increase excise taxes.
Finance minister Tito Mboweni in his budget speech on Wednesday announced that the duty on a pack of 20 cigarettes will go up by R1.14 cents to R16.66 from 1 April as government tries to raise additional revenue of R15 billion in 2019/20.
Ntando Sibisi, BTFA chairperson, said in a statement they feel that the decision to hike excise tax on cigarettes at a time when government is still failing to enforce the law against tax evading tobacco companies, was a callous disregard for law abiding workers.
Sibisi said they had warned government that 10,000 jobs in the sector were on the precipice due to the legal industry rapidly losing share to illegal cigarettes.
"In his speech, the minister described himself as a farmer when he briefly said that with correct actions, the South African economy can return to plum times. Unfortunately, we - t he very same emerging farmers he aims at supporting - will need a market to sustain our income and our livelihoods," Sibisi said.
"If legal tobacco companies cannot sustain buying South Africa leaf from us, we will find ourselves with no option but to let farmworkers go. We want minister Mboweni to know that we are at our own crossroads."
Sibisi said while they welcomed the stance taken to fight the illicit trade of cigarettes through a recently-established illicit trade economy unit, they have heard all that before.
Sibisi said the South Afrcan revenue Service (Sars) was their only hope of saving jobs by curbing trade of illicit tobacco. Mboweni said a new Illicit Economy Unit launched in August 2018 will fight the trade in illicit cigarettes and tobacco.
British American Tobacco, which procure 90 percent of all the tobacco leaf farmed locally, has already hinted at a possibility of reviewing its business operations locally given that its business continues to shrink rapidly due to the boom in illegal cigarettes over the past few years.
Christo van Staden, managing director of Limpopo Tobacco Processors, said the hike in excise duties was putting the whole industry in jeopardy.
"In this tough economic times, the entire tobacco value chain – from the farmers right up to us, the processors – are faced with a bleak future in an event that legal cigarette makers stop buying leaf from us," van Staden said.
"The increase in excise duties makes things difficult as we are now in limbo and do not know what the future holds. Our last hope is Sars whose job has not been made any easier today."
- African News Agency (ANA)