Tobacco Ban could lead to a Tax increase

Published Jun 24, 2020


DURBAN – The billion-rand tobacco industry has come to a screeching halt and has left an enormous gap in tax-revenue. This is due to the ban on cigarette sales which was implemented at the start of the lockdown on March 27.

A former South African Revenue Service (SARS) lawyer said that if the tobacco sale ban is to continue, it would become costly to the country’s fiscus.

Tax Justice South Africa, a group that has been vocal on the prohibition of tobacco, estimated that approximately R35 million is lost in tax revenue from the tobacco ban. Get ready to pay for the decision by the South African government to throw away over R3 billion in cigarette taxes. The tobacco ban during lockdown has diverted that money to criminals in illicit trade. Now decent South Africans are expected to plug the gap again,” said Tax Justice South Africa.

According to Telita Snyckers, the author of the book Dirty Tobacco, the money lost would have been able to finance 66 000 police officers' salaries or over 200 000 in social grant payments.

Snyckers at an interview with Jacaranda FM on Tuesday said: "Historically we know that the majority of illegal cigarettes in South Africa were smuggled from Zimbabwe. But we have seen in recent years is that it has slowly been overtaken by local producers. What seems to be the case is that 25 percent of the current illicit market during the lockdown is being supplied by BAT (British American Tobacco).”

Finance Minister Tito Mboweni is expected to deliver an emergency budget speech on Wednesday, June 24.

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