#TipsForTito: Mboweni needs to clamp down on illegal cigarette trade
CAPE TOWN – The #TakeBackTheTax campaign has called on Finance Minister, Tito Mboweni, to do the right thing when he delivers his Budget speech in Parliament next week.
#TakeBackTheTax spokesperson, Yusuf Abramjee, in an open letter to the Finance Minister, offered some advice as his ministry called for #TipsforTito.
Abramjee said the illegal cigarette trade costs treasury a massive R8 Billion a year in lost taxes and now threatens over 10 000 jobs in tobacco farming and manufacturing.
“This means the livelihoods of more than 30 000 dependents is at risk,” he said.
These potential job losses and the lost revenue of R8 billion is just not something that our country can afford.
An Ipsos study – commissioned by the Tobacco Institute of Southern Africa (Tisa) – showed that RG (the brand owned by Gold Leaf Tobacco), was the biggest selling brand on the market, selling for R10 a pack, which Abramjee said could only mean it was an illegal tax dodging brand.
“It is clearly not paying the taxes owed of R17.85 per pack.”
#TakeBackTheTax is therefore now urging Minister Mboweni to rapidly clamp down on the manufacturers and sellers of illegal cigarettes.
“The evasion of taxes by those implicated in the Ipsos report means that South Africa is losing at least R8 billion annually in taxes. This is unacceptable and this is illegal,” he said.
Critically, Abramjee said, #TakeBackTheTax was also calling on the Minister not to increase taxes on legal cigarettes in his upcoming budget speech, until the South African Revenue Service (Sars) was able to collect taxes from illegal manufacturers.
“According to economists, any more tax increases will cause government revenues to continue to fall – as more smokers will buy resort to buying cheap illegal products instead of legal cigarettes,” said Abramjee.
“It is very clear that government should first collect taxes owing, before it can raise taxes, otherwise it runs the risk of betraying its own promises to protect jobs and deal with corruption.
“#TakeBackTheTax, therefore, believes that these #TipsforTito are in the best interest of the country, and we hope and trust that the minister will do the right thing,” he said.
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