CAPE TOWN – Finance Minister Tito Mboweni’s commitment to fighting illegal cigarette trade, outlined in his maiden Budget Speech, was welcomed by #TakeBackTheTax, but the organisation called the excise increase premature.
In a statement released after Mboweni’s address #TakeBackTheTax spokesperson Yusuf Abramjee said the organisation was pleased to see that the minister had committed to clamping down on the illegal cigarettes.
Mboweni turned a deaf ear to the tobacco industry’s desperate calls to not increase the interest on tobacco from their current level. The minister said: “Fiscal prudence requires some tax changes. We propose additional revenue measures of R15 billion in 2019/20. There will be a slight upward adjustment of the tax-free threshold for personal income taxes, with no change in the current personal income tax brackets. Together these will raise R12.8 billion.”
Abramjee said: “While we applaud some hard work ongoing at the SA Revenue Service, the clamp-down hasn’t actually happened yet. Illegal cigarettes are still the cheapest in the world and more available than legal cigarettes.”
He said at last year’s Budget Speech the then Finance Minister Malusi Gigaba also promised to take action against illegal cigarettes and nothing happened. “Last year was the year of promising. This year must be the year of doing. We need to see action.
“In this context, we are extremely disappointed to see that cigarette taxes are going up by R1.14 per pack. This will no doubt lead the consumption of more illegal cigarettes - which is already robbing our economy of at least R8 Billion in lost revenue.”
#TakeBackTheTax said this increase was nothing more than a free gift to illegal cigarette makers who continued to grow exponentially. It makes Sars’s efforts to clamp down much more difficult.
“We had expected that Treasury would be supporting Sars, not creating new incentives for smokers to keep flocking to illegal cigarettes. These illegal operators are behaving like cash-heist masterminds - and taking money from South Africa daily. If the government is increasing taxes yet again, it must start behaving like an effective government and enforce tax compliance now,” said Abramjee.
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