JOHANNESBURG – The recently launched Black Tobacco Farmers Association (BTFA) on Monday called for the government to keep excise taxes at their current level as finance minister Tito Mboweni will table his maiden Budget this week.
BTFA said their call to action was inspired by the SA Revenue Service's (Sars) incapacity to effectively tackle the illicit trade of cigarettes in order to protect farmers from the threat of job losses.
South Africa's top independent economists have found that revenue collections from taxes on cigarettes have declined sharply in spite of successive rate hikes.
Research house Ipsos reported in November 2018 that Sars was now losing at least R8 billion annually due to illicit cigarettes. Econometrix found that income from tobacco excise declined by R1.94 billion between 2015/16 and 2017/18.
Ntando Sibisi, the BTFA chairperson, said illicit trade, as well as an impending threat to increase excise taxes, posed a risk to the entire tobacco value chain, especially emerging farmer programmes that have developed small scale tobacco farmers.
"We just want to add our voice and request the minister ahead of him tabling his budget that we would like to see a Sars that will take tackling the illicit trade of cigarettes more seriously before excise taxes are increased further," Sibisi said in a statement.
"At this stage, more excise duties will do nothing but cause the illicit economy to grow even more. Under the current economic conditions, an excise increase will force more consumers to go for cheaper non-tax paying cigarettes."
Sibisi said illicit trade was partly caused by high excise taxes and was killing any progress that black farmers have made over the years to create jobs and maintain jobs.
Sibisi said the illicit cigarette trade places more than 10,000 jobs at risk and deprives South African taxpayers of R25 million in lost taxes daily.
"We call on law enforcement agencies to act and actually clamp down on illicit cigarette trade and hope that this will be reflected in the Budget," Sibisi said.