JOHANNESBURG – The trade in illegal cigarettes has increased dramatically, despite promises of a crackdown from the South African Revenue Service (Sars), according to the latest Tobacco Market Study from research house Ipsos.
Cigarettes selling for less than the tax of R17.85 per pack owed to Sars have grown market share by more than 25 percent, from 33 percent to 42 percent in the informal market, in just three months.
According to a 2015 judgment, cigarettes that sell for below the minimum tax can be deemed as illicit.
In a remarkable show of defiance, manufacturers of cigarettes selling below the minimum tax have expanded their distribution at the very same time as Sars has been promising to crack down.
Gold Leaf Tobacco’s RG brand is now the top selling brand in South Africa overall, overtaking all legal brands. It sells for an average price of just R10 and is, therefore, clearly evading the R17.85 owed to Sars on each pack.