Friday 22 January 2021 – THE Fair-Trade Independent Tobacco Association (FITA) and its breakaway member Gold Leaf Tobacco (GLTC) must sign up to the war against illicit cigarettes that are robbing South Africa of R8 billion in taxes every year, Tax Justice SA (TJSA) urges today.
An undercover investigation by TJSA has revealed that the sale of illicit cigarettes is now widespread and endemic in mainstream outlets across South Africa.
Posing as regular shoppers, TJSA was able to buy 34 different brands of cigarettes at prices below the Minimum Collectible Tax (MCT) level, meaning due taxes are going unpaid. Two-thirds (23) of these were brands belonging to FITA (15) and GLTC (8).
“FITA and Gold Leaf have a duty to explain how their brands are widely available at prices that suggest they are dodging billions in excise taxes,” says TJSA founder Yusuf Abramjee.
“For instance, we bought Red&Black, made by FITA member Afroberg, for R7.20 a pack, a price that’s barely a third of the tax that should have been paid on that pack. We bought Remington Gold, belonging to GLTC, for as little as R9.30.
“This is evidence of industrial-scale tax evasion. If these manufacturers wish to be treated as legitimate businesses, they should respond fully to this evidence.
“They must also sign up to TJSA’s five-point action plan to defeat the menace of illicit cigarettes, which annually robs the fiscus of R8 billion – enough money to pay to vaccinate over half the nation.
“It’s disappointing that so-called experts purporting to be against illicit trade are sniping at our independent study when they should be uniting with us against this brazen criminality.”
A full dossier of evidence, including hours of video footage, has been delivered to SAPS, SARS and departments of Finance, Health and Trade.
To combat what is now the world’s biggest cigarette black market, TJSA demands the following urgent action:
- Arrest, prosecute and seize the assets of criminals heading the production and distribution of illicit cigarettes
- Enforce stricter controls at our borders, place a permanent SARS official at every cigarette factory and introduce track-and-trace technology
- Shut down any plant making cigarettes found being sold at prices below the Minimum Collectible Tax (MCT) of R20.01
- Impose a minimum price for tobacco products at 30% above MCT, below which these products are identified as illegal and immediately seized
- Introduce an education programme for retailers, paid for by tobacco excise taxes, to help them identify which brands are illicit and cannot be sold