British American Tobacco South Africa (BATSA)has called on the government, and the South African Revenue Serves to enact four pressing initiatives to stem the tide of illegal cigarettes in the country. Picture: Thobile Mathonsi, ANA.
British American Tobacco South Africa (BATSA)has called on the government, and the South African Revenue Serves to enact four pressing initiatives to stem the tide of illegal cigarettes in the country. Picture: Thobile Mathonsi, ANA.

South Africa is sinking under a tide of illicit cigarettes: BATSA

By BR Reporter Time of article published Jul 7, 2021

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British American Tobacco South Africa (BATSA)has called on the government and the South African Revenue Serves to enact four pressing initiatives to stem the tide of illegal cigarettes in the country.

This comes after Ipsos, an independent market research agency, recently released findings showing that South Africa’s illicit tobacco trade has surged to unprecedented levels as manufacturers flood shops across the country with untaxed cigarettes.

BATSA general manager Johnny Moloto said: “This research is damning proof that authorities have failed to bring South Africa’s colossal criminal market in cigarettes under control.”

“Tax-evading manufacturers who exploited last year’s lockdown ban are now running rampant and costing South Africans huge sums of money at a time when every cent is a lifesaver. It is nothing short of a national emergency that demands a full-scale inquiry into the whole industry.”

Moloto said the government and Sars needed to: Ensure compliance of all manufacturers with Sars production counter rules; the immediate introduction of a minimum retail sales price of R28 for a pack of 20; the government should finally ratify the World Health Organization Illicit Trade protocol to fight illicit trade; South Africa must introduce a comprehensive track-and-trace system to stamp out this brazen criminality once and for all.

According to BATSA, the tide of illegal cigarettes has infiltrated every province as criminals wage a price war that costs the state billions and destroying the legal market.

Quoting the research, BATSA said the number of shops selling illegal cigarettes in the Eastern Cape has more than doubled in just four months since the last time results were released;

• In KwaZulu-Natal, the rate has shot up by one third;

• Two out of three shops in the hotspot provinces of Free State, Gauteng, and Western Cape sell illegal cigarettes;

• Illegal cigarettes are on sale in nearly half (41%) of all shops nationwide;

• Five times as many outlets on petrol forecourts now sell illegal cigarettes since the last time results were released;

• Illegal cigarettes are sold for as little as R6 per pack, a fraction of the Minimum Collectible Tax (MCT) rate of R21.60 per pack of 20.

Brands owned by or licensed to Gold Leaf Tobacco Corporation (GLTC) continue to win the illegal price war, with the number of its South African brands purchased below the MCT rising by 25%.

The incidence of brands owned by or licensed to Carnilinx, a member of the Fair-Trade Independent Tobacco Association (FITA), bought below the MCT, increased by a third. There was a threefold increase in brands owned by or licensed to FITA-member Protobac being sold below the MCT.

“The bulk of the illicit tobacco problem in South Africa has local origins, as the report demonstrates,” said Moloto.

He added that “It demands justice, and that necessitates an immediate Commission of Inquiry into the tobacco market in South Africa.

BUSINESS REPORT ONLINE

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