Sunday 13 September 2020 – AN INVESTIGATION by Tax Justice South Africa (TJSA) today exposes the dodgy tactics still being used by the biggest beneficiaries of the lockdown’s illegal cigarette trade.
TJSA now calls on the Fair-Trade Independent Tobacco Association (FITA) to address the following revelations about one of its principal members, the Gold Leaf Tobacco Corporation (GLTC).
- GLTC is selling cigarettes through the internet to private customers in DIRECT DEFIANCE of the Tobacco Control Act.
- GLTC makes no checks to verify the identity of these customers or to establish that they are above the LEGAL AGE of 18.
- Online customers can buy single cartons for as little as R22.50 per pack INCLUDING NATIONWIDE DELIVERY, suggesting that GLTC is not paying the DUE TAXES of R20.35 per pack.
Brands made by GLTC, including Voyager, RG and Sharp, accounted for more than a quarter of all cigarettes bought on the black market during the 144-day lockdown sales ban.
The Zimbabwean-owned and controlled company is now accepting orders from private individuals on its online sales site, Gold Leaf Retail Trade Partners (www.glrt.co.za), in defiance of the Tobacco Control Act, which “prohibits the sale, or offer of sale, of tobacco products through the internet”.
TJSA founder Yusuf Abramjee says: “In less than a minute on the internet, we were able to register online as a trade partner with GLTC without any checks or verification of our identity, age or status.
“Cigarettes were then delivered to a suburban residential address with no questions asked. They were even offering the option of cash on delivery – even for a single carton.
“No doubt GLTC will argue that this is a legitimate trade deal, but this a sham as no checks are carried out on online customers. Our investigations showed that even schoolchildren can register as a so-called trade partner.”
The free door-to-door delivery is carried out by a national courier company, which advertises a minimum fee of R115.
“If Gold Leaf are paying the due taxes, they stood to lose almost R100 on every carton they delivered to us.
“No doubt they will have a bulk discount with the courier, but the due tax on a single R225 carton of RG Blue is R203.50. That leaves R21.50 to split between everyone from the tobacco farmer to the delivery guy.
“This is simply not credible, especially for a company that was supposedly outlawed from doing business for five months during lockdown.
“FITA chairperson Sinenhlanhla Mnguni needs to address these dubious tactics by one of his organisation’s senior members.
“Can Mr Mnguni guarantee that the correct taxes were paid on our purchases? And, as a lawyer himself, does Mr Mnguni endorse GLTC playing so fast and loose with the Tobacco Control Act by selling through the internet?”
In May 2019, GLTC’s bid to sue anti-crime activist Abramjee for R50 million in damages was struck off the roll in the Gauteng High Court.
Abramjee had used research by Ipsos to show that GLTC was dodging taxes through the production of its RG brand, which dominated the illicit cigarette market.
During the lockdown ban, RG’s market share quadrupled. It was the biggest-selling brand as desperate smokers were forced to pay prices up five times higher than before the prohibition.
“It now looks like GLTC is compiling a big database of non-retail purchasers of tobacco,” says Abramjee. “They are setting up a potentially massive illicit distribution network, completely outside retail, so they can continue to circumvent the law if a ban is ever reinstated.
“Tax Justice SA will always call out criminals in the illicit trade and GLTC has a lot to answer for when it comes to illegal cigarettes.
“These new online sales are proof that they consider themselves above the law. Authorities should bring their whole operation to justice and FITA should account for why one of its members appears to be so brazenly flouting the law.”