Batsa mulls options after court delay
JOHANNESBURG - British American Tobacco South (Batsa) is considering its legal options after the government postponed the extended cigarettes and vaping ban hearing by six weeks, the company said on Friday.
Batsa, South Africa’s biggest cigarette-maker, whose brands include Peter Stuyvesant and Rothmans, said that the Department of Cooperative Governance and Traditional Affairs (Cogta) on Friday delayed the hearing to early August despite agreeing that the case would be heard tomorrow, an allegation which Cogta has vehemently denied.
Johnny Moloto, Batsa’s head of external affairs described the decision as “inexplicable” and a “worrying” decision not to consider an urgent application to lift the tobacco sales ban in this legal term. “We are considering all our legal options and will be liaising directly with the government, as we had both previously agreed that the matter was urgent and needed to be heard next Tuesday,” Moloto said
He warned that the delay would accelerate job losses and cost the fiscus R1.4 billion in excise taxes.
“In this almost six-week delay alone the fiscus will lose more than R1.4bn in excise tax alone, as the massive illegal cigarette trade tightens its grip on the country. Thousands of jobs stand to be lost in the economy as criminality becomes the new normal,” Moloto said.
According to the Tobacco Institute of Southern Africa, the illegal cigarette market cost the country around R8bn in lost taxes in 2019 and more than R40bn since 2010, while Batsa contributed R13bn in total taxes in 2019, of which R10bn was tobacco excise.
The tobacco giant said the National Treasury is currently losing R35million of revenue in excise taxes every day that the ban on cigarette sales in South Africa continues, translating into R4.7bn lost between March 26 to the expected August 6 for the hearing.
However, Cogta late on Friday rebuffed Batsa’s claims, citing that Western Cape Judge President John Hlope alone had decided that the application could only be heard in the coming court term after August 4.
Cogta spokesperson Lungi Mtshali said: “It was the judge president alone who decided the matter should be heard in early August. He took that decision yesterday (Thursday) morning before the state-attorney had raised the issue of the new matter in the applicants’ replying court papers.
“The Western Cape judge president affirmed that decision this morning after considering representations from both Batsa’s attorneys and the state-
Mtshali said the government acceded to Judge Hlophe’s request because Batsa’s replying papers delivered on Thursday contained substantial new information, which meant it was most unlikely that the matter would be ready to be heard today.
Batsa persisted with its request that the matter be heard on June 3
The judge president rejected Batsa’s request, set the matter down for hearing on August 5 and 6, and assigned three judges to hear it. “The government does not have control over the scheduling of court hearings,” Mtshali said. On Thursday, Batsa released a statement that the matter would be heard on June 30, which Mthsali said was unfortunate, because by then, the decision was made.
Batsa together with other role-players in the industry, including the Japan Tobacco International tobacco farmers and retailers, launched an urgent application last month to challenge the government’s decision to extend the ban on tobacco sales during level 3 of the Covid-19 risk-adjusted strategy.
The parties said the extended ban on the sale of tobacco and vaping products threatened the survival of the legal tobacco sector and had only succeeded in the growth of an illegal industry. Cartons of cigarettes which usually retailed for R300 to R400 were being sold for as much as R900, with no tax being paid.
Batsa shares closed 1.13percent higher at R665.60 on the JSE on Friday.