Tuesday 16 July 2024 – Tax Justice SA (TJSA) applauds South African Revenue Service (SARS) Commissioner Edward Kieswetter for his latest commitment to tackling the producers of illicit cigarettes who are robbing our country of billions of rand and undermining public health.
Commissioner Kieswetter said SARS would “leave no stone unturned” in pursuing the law-breaking manufacturers who are flooding the country with illicit cigarettes at record levels.
He was responding after a shocking new Ipsos survey showed that almost two out of every three stores nationwide now sell tax-evading cigarettes that deprive the fiscus of more than R24 billion in vital excise revenue yearly.
Tellingly, most of the illicit cigarettes purchased in the survey were brands belonging to the local cigarette firms who are defying the law that allows SARS to install CCTV in tobacco factories.
Commissioner Kieswetter said: “We must all ask ourselves this question: Why are businesses resisting surveillance if there’s nothing to hide?”
Speaking on eNCA’s South Africa Tonight programme, Kieswetter went on: “These are syndicated criminal organisations, who work across jurisdictions and across borders. We have to work with other law enforcement agencies to bring these criminals to book, but we will not leave any stone unturned in tackling those who seek to defraud and steal from the fiscus, because ultimately they steal from the poor. We will not give up.”
TJSA founder Yusuf Abramjee said: “The Commissioner’s commitment to tackling this national menace is to be applauded, but the latest shocking figures reveal record criminality and show there is a massive job to be done.”
The Ipsos survey found illicit cigarettes being sold in 59.3% of stores nationwide, which itself represents a dramatic increase from just 27% in October 2022. In hotspot provinces, that number rises to over 75%. Illicit cigarettes were bought for as little as R5 per pack of 20, a fraction of the minimum collectible tax (MCT) of R25.05 (R21.78 excise plus R3.27 VAT).
More than half of the illicit purchases in the survey were linked to companies that won an interdict in the High Court in May against 24/7 camera surveillance by SARS.
They include Carnilinx, which is the principal member of the Fair Trade Independent Tobacco Association (FITA) and is owned by self-confessed tobacco smuggler Adriano Mazzotti. Almost 90% of brands belonging to Carnilinx were sold below MCT in the survey.
Other companies litigating against SARS’ CCTV rule include Best Tobacco (75% of their brands purchased in the survey were below MCT), Afroberg (71%), United Tobacco (91%), Amalgamated Tobacco Manufacturers (50%), Folha (56%), and Protobac (100%). Newcomers Bozza (34%) and Harrison (52%) are also implicated.
Abramjee said: “SARS’ continued pursuit of these criminals is crucial to protecting our nation’s finances and public health. The CCTV rule must be enforced without further delay.
“The emergence of unknown and potentially dangerous products in the post-COVID era, as highlighted by Commissioner Kieswetter, raises serious health concerns. Consumers, lured by lower prices, unknowingly risk their health while contributing to a criminal enterprise.
“TJSA stands shoulder-to-shoulder with SARS in this fight and is urging the new Government and the National Treasury to ensure SARS is properly funded and resourced to do its job.
“The South African public should join us in condemning the illicit cigarette trade. Refuse to buy these harmful tax-evaded products. Report any suspicious activity to the authorities. Together, we can build a healthier, more secure South Africa, free from the stranglehold of criminal networks.”
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