Fawu said that the illicit sale of cigarettes had now increased to 42 percent of total market share with a reported four out of every 10 of these estimated to be an illicit deal. Photo: Reuters

CAPE TOWN – The Food and Allied Workers Union (Fawu) has noted, with disgust, the latest study by Ipsos Research Institute on the rise in illicit trade of cigarettes that is reported to cost the economy an estimated R8 billion loss in revenue.

It is said that the illicit sale of cigarettes had now increased to 42 percent of total market share with a reported four out of every 10 of these estimated to be an illicit deal.

The research suggested that a particular brand of counterfeit cigarettes – “RG” – was trading at a mere R10 and was now one of the most popularly bought items. With a minimum tax of R 17.85 payable on every pack of cigarettes it was obvious that the manufacturer was not paying tax despite undertakings from the South African Revenue Service (Sars) to “crackdown” on illicit traders of tobacco.

Earlier this year, Fawu demanded that the National Treasury equip Sars in order to strengthen its abilities to investigate and prosecute those responsible for the manufacturing and sale of counterfeit goods. 

Till this day, Fawu is still waiting on a response in terms of an action plan to act against illicit trade. It is therefore not surprising that illicit trade is booming in South Africa due to the poor ability of the responsible institutions to trace and prosecute culprits.

Secretary of the shop stewards committee at British American Tobacco SA, Mohau Mokhele, was worried about his job, his family and his co-workers. 

“These illegal cigarettes are so cheap that it’s impossible for an employer that is paying its tax to remain in business. This threatens my job. It threatens the jobs of my co-workers, our families and our town, Heidelberg”, he said

Mohau is not only worried about his own co-workers but also about the 10 000 jobs on tobacco farms in South Africa. “We have marched together, as workers from the factories and from the farms, once to Sars in March 2018 and once to Treasury in August 2018 to protest against this illicit trade. 

“But all we get is promises. We will march to the ANC headquarters next because the ruling party is responsible for this.  If we lose our jobs, they will lose our votes and the votes of our families and friends.  If we lose our jobs, everyone will know who is to blame”, said Mokhele.  

“This government has no business increasing regressive taxes, such as VAT, on law-abiding citizens and companies while they are allowing tax-evading companies to take over the market by dodging taxes.” 

BUSINESS REPORT ONLINE