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Press Release

Illicit cigarettes rob SA of R74m daily and tobacco bill will make that worse, economists warn

Wednesday 17 October 2023 – A MAJOR new report reveals that South Africa’s illicit cigarette trade is even bigger and more destructive than feared – and the Government’s new tobacco control bill will simply make it worse.

An investigation by leading international analysts Oxford Economics shows:

  • Illicit cigarettes have robbed South Africa of more than R72 BILLION in tax revenue in just three years 
  • The annual tax loss to illicit cigarettes has more than DOUBLED since 2019 and now adds up to over R27 BILLION a year – that’s R74 MILLION EVERY DAY 
  • Almost 36,000 JOBS supported by the legal tobacco sector HAVE BEEN LOST since the lockdown sales ban that TURBO-CHARGED illicit trade 
  • The new tobacco bill will drive MILLIONS MORE consumers to buy their cigarettes in the ILLEGAL MARKET 
  • If the bill is enacted it will DESTROY 28,704 MORE JOBS and ROB SOUTH AFRICA of a further R5.5 BILLION in tax revenue

 “This in-depth independent study should be the alarm siren that stops politicians sleepwalking into an economic and social catastrophe,” Tax Justice SA founder Yusuf Abramjee said today.

“If lawmakers are at all concerned about the prosperity of our nation and preventing organised crime kingpins from seizing control of another key commercial sector, they should ditch the tobacco bill and start cracking down on real villains.”

The report, compiled by analysts Oxford Economics, states that the Tobacco Products and Electronic Delivery Systems (TPENDS) Control Bill is unlikely to reduce cigarette consumption in South Africa. Instead, a resultant decline in legal sales will boost business in the illicit market due to “weak enforcement, entrenched illicit channels and low illicit prices”.

It will virtually wipe out the legal tobacco industry, which contributed about R48.4 billion to South Africa’s GDP in 2019. “The TPENDS Control Bill could put more pressure on an industry that is still reeling from the effects of the government-imposed sales ban with dire socio-economic and fiscal effects,” the report concludes.

Abramjee said: “The report shows that illicit cigarettes are now robbing Mzansi of over R27 billion in tax revenue annually. That’s R74 million rand every day, which should be paying for schools, hospitals, housing and other essential services like electricity. 

“Now the tobacco bill threatens to increase those losses by exacerbating the devastating impact of the unconstitutional sales ban that was imposed during lockdown. It will create even more business for the counterfeiters and smugglers who are flooding our country with tax-evading ‘cheapies’.

“It will have no impact on overall cigarette consumption but will hand full control of South Africa’s cigarette market to the mega-wealthy criminals who are impoverishing the nation and its people.

“Honest citizens will be turned into law-breakers overnight. Meanwhile, the kingpins of illicit trade will grow even fatter on the money that’s meant to build a better Mzansi for all.

“The new tobacco bill is simply a gift for gangsters. Any South African who respects the rule of law and seeks a just society should demand that this potentially disastrous legislation is drastically altered.”