File photo.
File photo.

Illegal cigarette kingpins made R12bn since lockdown ban on tobacco

By Thobeka Ngema Time of article published Mar 3, 2021

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Durban - Tax Justice SA (TJSA) and British American Tobacco South Africa (Batsa) are open to a commission of inquiry into the illegal cigarette trade in the country that has ballooned to billions of rands, the organisations have said.

On Tuesday,, TJSA founder Yusuf Abramjee said the illicit trade exploded since the 20-week ban in 2020 and that cost the country R38 million in lost excise taxes every day, and enriched kingpins in the black market to the tune of R12 billion.

Criminals selling tax-evading cigarettes now openly dominate the market across the country, costing the fiscus an estimated R8 billion a year in lost excise alone.

“The scale of the problem is so big that TJSA would welcome an inquiry with real powers, which is able to investigate the actions of all manufacturers and the other players involved in the sale of all cigarettes throughout the country,” said Abramjee.

He said they had drawn up a five-point plan to combat the sale of illicit cigarettes – arrest, prosecute and seize assets of criminals heading the production and distribution of illicit cigarettes; enforce stricter controls at our borders, place a permanent SARS official at every cigarette factory and introduce track-and-trace technology; shut down any factory making cigarettes that are found being sold at prices below the Minimum Collectible Tax (MCT) level of R20.01 per pack; impose a minimum price for tobacco products at 30% above MCT, below which these products are easily identified as illegal and can be immediately seized; and set up an education programme for retailers, paid for by tobacco excise taxes, to help them identify which cigarettes are illicit and should not be sold.

Batsa said they would also back any proper and comprehensive investigation into the booming criminal trade that continues to cost South African taxpayers billions of rand in lost revenue.

Batsa general manager Johnny Moloto said: “This is an issue of utmost national importance, that is taking huge sums out of the pockets of South Africans and putting it into the pockets of criminals every single day. It deserves a fully resourced investigation or commission of inquiry with real powers.”

Batsa said that it was “utterly confident” that such an investigation would pay for itself many times over, by identifying the culprits behind the illegal trade, prosecuting them and shutting down the illegal market to return billions in lost taxes to South African citizens.

Meanwhile, Fair-trade Independent Tobacco Association (Fita) chairperson Sinenhlanhla Mnguni said: “In our engagements with law enforcement agencies, particularly over the last few months, we have pleaded with them to work hand-in-hand as law enforcement agencies, together with the relevant government departments, in order to inter alia shore up our borders, and to protect the sovereignty of this country – which is currently being treated as a playground by cigarette manufacturers and traders in our neighbouring countries, who act with impunity while legitimate cigarettes manufacturers in South Africa continue to be subjected to ever-increasing regulation.”

Daily News

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