Mzansi’s rampant illegal cigarette trade is not only costing the country billions of rand in tax, but it is also jeopardising the existence of tobacco farming in South Africa.
This, according to Black Tobacco Farmers Association (BTFA) chairman, Shadrack Sibisi. The association condemns the illegal trade of tobacco products in the country and says that the practice is costing taxpayers and hardworking tobacco farmers. Illegal cigarette trade now constitutes almost half of all tobacco sales in South Africa.
“All the illegal operators blatantly ignore hardworking South African tobacco growers and source their tobacco leaf abroad, robbing the country not once, but twice,” says Sibisi.
Criminals swamping the market
A recent report by market research company Ipsos has revealed that the trade in tax-evading tobacco has hit record highs, with almost half (43%) of all stores nationwide now selling illegal cigarettes.
The researchers reported that they found packs of 20 selling for as little as R8, which is a fraction of the taxes that should rightfully be paid on them. They also revealed that the number of stores selling illegal cigarettes in the Northern Cape (63%) has quadrupled in the past four months. Three in four stores in the Free State (76%) and the Western Cape (77%) were selling illegal cigarettes.
Another report, published by Tax Justice SA, revealed that suppliers of illegal products were swamping the market with even master cases carrying 500 packets, available at small shops. Its investigators found illegal cigarettes at 96% of the stores they visited in Cape Town, Johannesburg and Pretoria.
British American Tobacco South Africa (BATSA) general manager Johnny Moloto echoed that the country’s illicit cigarette trade was out of control, and the largest black market for cigarettes in the world.
“Over a year since the disastrous lockdown sales ban, the illegal networks it enabled and enriched continue to dominate the retail sector,” he says. “They are destroying legal jobs and livelihoods and depriving Treasury of R19 billion in cigarette excise for 2021 alone.”
Moloto further says that the much-publicised efforts by SARS, the police and defence force to disrupt these cartels, have merely scratched the surface. “Government has a duty to make this menace a national priority, to enforce the law without fear or favour, and to rid our country of this revenue-sapping scourge once and for all.”
Health concerns raised
Agricultural lawyer Katlego Ngwane agrees that illegal tobacco has a very serious impact on the economy. She adds that it poses a further threat – to the health and safety of consumers.
“From a safety perspective, we don’t know what is contained in that illegal tobacco. It is putting South Africans at risk for health issues. We don’t know if illicit cigarettes comply with the health regulations as to how much nicotine or tar is in these products.”
The Black Tobacco Farmers Association has called for support from government and industry to help farms grow and diversify into other crops.
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