Saturday 15 August 2020 – THE long overdue lifting of South Africa’s lockdown prohibition must be accompanied by an urgent crackdown on the crooks it has enriched through illegal trade, Tax Justice South Africa (TJSA) warns tonight.
“The bans on alcohol and tobacco have given criminal networks total control of the market and gifted them tax-free riches they could never have dreamt of,” says TJSA founder Yusuf Abramjee.
“For 20 weeks, they have been making R100 million a day selling illegal cigarettes to hard-up smokers.
“Now’s the time to draw a line in the sand and put an end to this systematic looting of the South African people once and for all.
“These crooks won’t stop selling illegal cigarettes just because the ban has been lifted. They will simply try to sell more and cheaper cigarettes without paying the due tax, so that they can continue to rip off decent citizens as we face unprecedented hard times.
“They didn’t pay tax before the ban and they won’t pay it after the ban. If you see cigarettes for sale for less than R25, they are suspicious and should be reported.”
Any packet of cigarettes priced R25 or less should be considered illegal, says Abramjee. The excise (R17.40) and VAT (R3.26) leave a margin of no more than R4.34 to be shared by manufacturer, wholesaler and retailer.
“No one can afford to sell at that price. Anyone who does so must be keeping the due taxes for themselves,” says Abramjee.
“It is widely acknowledged that some illicit cigarettes come from established manufacturers. During the ban, traditionally cheaper brands increased their market share by up to 600%.
“The criminals involved will be determined to keep control of the market and retain their new customers who’ve been forced to buy in the illegal market for almost five months.
“Now more than ever, the Government has a duty to ensure every cent of due tax is collected as we seek to rebuild the economy and repay the huge sums we’ve had to borrow.
“The Government must ratify the WHO Illicit Trade protocol, police must enforce the trading laws, we need strong border control – particularly at the Zimbabwe frontier, where smuggling activity has sky-rocketed – and we need strong audits at tobacco factories going forward.
“If we are going to defeat the virus and rebuild a better South Africa for all, we must defeat the cynical criminals in the illicit economy who threaten our very survival.
“The ban is over at last, but the war on the criminals it enriched is only just beginning.”