Tuesday 9 November 2021 – DAMNING new research shows authorities are failing miserably to stop illicit cigarettes flooding the country and robbing us of billions of rand, Tax Justice SA warns today.
A report by independent market researchers Ipsos reveals the rampant trade in tax-evading tobacco has hit record highs, with almost HALF (43%) OF ALL STORES nationwide now selling illegal cigarettes.
“Ipsos found packs of 20 selling for as little as R8, which is a fraction of the taxes that should be paid on them,” said TJSA founder Yusuf Abramjee. “Criminal manufacturers are swamping the market. They’re making a fortune while the nation is looted of vital funds that could combat the pandemic and rebuild our shattered economy.
“The busts that have been trumpeted by SARS and SAPS recently are evidently just a drop in the ocean. For the sake of hard-working South Africans’ lives, livelihoods and the rule of law, tackling this menace must be treated as a national priority.”
The Ipsos investigation also reveals:
- THREE IN FOUR stores in Free State (76%) and Western Cape (77%) sell cigarettes below the Minimum Collectible Tax (MCT) rate of R21.60 per pack of 20
- The number of stores in Northern Cape selling illegal cigarettes (63%) has QUADRUPLED in the past four months
- That means FOUR hotspot provinces now have shops selling illegal cigarettes in TWO-THIRDS of their stores
Brands belonging to Gold Leaf Tobacco Corporation (GLTC) are winning the illegal price war, according to the report. They were the cheapest available in 1,761 (39%) of stores with almost half (42%) of those purchases below the MCT.
Brands belonging to Carnilinx, the chief member of the Fair-Trade Tobacco Association (FITA), were the most frequently (62%) found below MCT. Purchases of brands owned or licensed by Afroberg, whose name has been removed from the FITA website in recent weeks, were the second-most prevalent (59%) below MCT.
“The usual suspects are implicated, just as TJSA has found in its own investigations,” said Abramjee. “TJSA has been conducting research independently into the illicit trade over recent months and we will be releasing our report very soon.
“We hope it serves as a wake-up call to the authorities. South Africa cannot afford this industrial-scale looting to continue a single day longer.”