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Press Release

Caught On Camera: TJSA exposes rampant illicit cigarette trade

Tuesday 16 November 2021 –  AN EXPLOSIVE new undercover investigation by Tax Justice South Africa (TJSA) shows that criminal manufacturers are flooding shops with tax-evading cigarettes and looting the country at record levels.

Our damning report, released today, shows storekeepers are openly selling cigarettes at up to four times below the legally feasible price in 97 percent of the stores visited in Cape Town, Johannesburg and Pretoria.

Compelling footage filmed on a hidden camera also reveals how:

  • Our mystery shopper bought illicit cigarettes in huge volumes – up to 500 packs at a time – proving that the retail sector is being overwhelmed by criminal suppliers

  • Stores are openly selling illicit cigarettes at prices up to 20% lower than in our 2020 investigation – proving that even more tax is being evaded

  • Shopkeepers brazenly offered these illicit cigarettes, proving they’re either ignorant of the laws or confident those laws won’t be enforced

  • Once we’d bought as much as we could carry, vendors encouraged us to contact them again for more illegal purchases, proving the supply of illicit cigarettes exceeds demand

  • Despite the detailed dossier of evidence gathered in our first investigation, which was handed to the South African Revenue Service (SARS) and police chiefs in January, brands belonging to the same licensed manufacturers still dominate the illicit market

TJSA founder Yusuf Abramjee said today: “Our report is irrefutable proof that criminals have taken control of South Africa’s cigarette trade and authorities are failing to stop our economy being looted of billions of rand.

“We bought huge volumes of cigarettes at prices that show taxes are being evaded on a massive scale and, yet again, the usual suspects are implicated.

“Brands bearing the name of Gold Leaf Tobacco Corporation (GLTC) and members of the Fair-Trade Independent Tobacco Association (FITA) are winning this illegal price war.

“SARS Commissioner Ed Kieswetter admitted just last week that most of the tax-evading cigarettes are being produced locally.

“Yet if any action is taken at all, it is just truck drivers or shopkeepers who are arrested.

“SARS, SAPS and other enforcement agencies must get serious about this scourge. They must follow the money, catch the kingpins and lock them up.”

Our researcher set out to buy cartons (10 packs) and mastercases (50 cartons/500 packs) at prices below the Minimum Collectible Tax (MCT) of R21.60 (R18.78 excise plus R2.82 VAT) per pack of 20.

He bought a total of 5 691 packs of cigarettes, in 36 purchases at more than 20 stores, for R52 141. That amounts to significantly less than half of the tax that should have been paid on them. It equates to an average of just R9.16 per pack.

Twice we bought mastercases for just R3 000 – or R6 per pack, less than one third of the taxes that should have been paid on them. The MCT for a mastercase is R10 800. Other key findings from our investigation include:

  • In over half the stores visited, we bought cigarettes for no more than R10 per pack, less than half the legal tax rate

  • Brands owned by Gold Leaf Tobacco Corporation (GLTC) were readily available at illegal prices, including Chicago, Remington Gold, Sahawi, Savannah and Sharp

  • We bought mastercases of Remington Gold (x2), Chicago, Sahawi and Sharp for well below the MCT

  • We bought 500 packs of Remington Gold for R4 300 – R8.6 per pack – in full view of a police headquarters just 100m away

  • Brands owned by members of the Fair-Trade Independent Tobacco Association (FITA) were also available at a fraction of the legal rate

  • These included brands belonging to Afroberg (Cape – R6 per pack), Carnilinx (Shasha – R7, VIP – R9, Mega – R12.5, JFK – R15, Premium – R19, Richman – R19), and Best Tobacco (Caesar – R16)