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Press Release

National task force must combat rampant illegal cigarette trade

Monday 14 February 2022 – A POWERFUL national task force to tackle the out-of-control illegal trade in cigarettes must be established immediately, Tax Justice South Africa (TJSA) demanded today.

The call came after further proof that the country has become a “gangsters’ paradise” for huge criminal syndicates robbing citizens of tens of billions of rand in taxes.

TJSA founder Yusuf Abramjee said that a new report in The Daily Maverick showing links between the owners of Gold Leaf Tobacco Corporation (GLTC) and the company targeted by the South African Revenue Service (SARS) in a multi-billion-rand VAT scam is “highly disturbing.”

Abramjee said that packets of cigarettes continue to be sold at well below the Minimum Collectible Tax (MCT) level of R21.61 per packet.  This, he said, means that those cigarettes likely yield absolutely zero tax.

Recent TJSA research shows that criminal manufacturers who flood the country’s shops are depriving the Treasury of R20 billion a year in excise alone.

The TJSA founder says that the crisis is so big, and so lucrative for the criminals, that only a dedicated and resourced task force can tackle it.

“We need SAPS and SARS working hand-in-hand in an expert unit that also comprises tax experts, international money-laundering experts, lawyers, dedicated prosecutors and corporate fraud investigators,” said Abramjee.

“The enemies of South Africa who are defrauding our country and robbing our citizens are incredibly rich and well resourced.  They have battalions of criminal experts in their operations.  They think that they are untouchable.  We have to match them and beat them.”

Abramjee said that a “zero tolerance” task force that targeted the illegal trade in tobacco –  whether it be one pack or tens of thousands of packs – would pay for itself almost immediately.

He pointed to purchases as recently as last week of a packet of Richman cigarettes for just R20 in Cape Town, which could not have delivered the legal tax to the Treasury.

And he said that a TJSA researcher, using a hidden camera, was easily able to buy mastercases (500 packs) at up to four times below the legally feasible price.

Brands bought below MCT included those belonging to Zimbabwean tobacco giant Gold Leaf (GLTC) and members of the Fair-Trade Independent Association (FITA).

“There is more than one Rich Man profiting off the misery caused by the illicit trade in tobacco,” said Abramjee.

“Now is the time to go after them all.  Set up the task force and give it teeth.  Lock them up.”

TJSA also called for the implementation of new charter which would bring about:

• Immediate adoption of SARS’ CCTV policy to let officials monitor production at all cigarette factories
• Closure by SARS of any factory producing brands of cigarettes found selling beneath the Minimum Collectible Tax (MCT) level of R21.61 per pack
• The arrest and prosecution of those running these companies, seizure of their assets and the return of the looted billions to their rightful owners – the State and its people
• A minimum legal price for tobacco products at retail level of 30% above MCT, below which they are automatically recognised as illegal and instantly seized