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Press Release

New report shows SARS is losing fight against R19bn tobacco criminals

By May 23, 2022No Comments

Thursday 7 April, 2022 – A DAMNING new report shows authorities are losing the fight against criminals who are flooding shops with illegal cigarettes and robbing South Africa of billions in vital revenue, Tax Justice SA (TJSA) warns today.

Leading market researchers IPSOS say that the trade in tax-evading tobacco has exploded in the past year, despite the government’s lifting of the lockdown sales ban 18 months ago.

TJSA founder Yusuf Abramjee says: “The national state of disaster may be over, but the disastrous impact of the lockdown sales ban is actually getting worse.

“This damning new IPSOS report shows that the illicit trade in cigarettes that was fuelled by the lockdown ban is now entrenched across the country and authorities appear unable or unwilling to tackle it.

“Four out of five shops in the Western Cape are now selling illicit cigarettes, which are also on open offer in the vast majority of stores in Free State and Gauteng.

“There are four times as many fuel station shops selling cigarettes than a year ago and a single pack can now be bought for as little as R7, even cheaper than in the last survey in October.

“SARS might boast that it is winning the fight against tax cheats, but they are spectacularly losing the war against the brazen cigarette manufacturers who are growing even richer at the expense of honest, hard-working South Africans.”

In their nationwide survey in March, IPSOS researchers found that the vast majority of stores in hotspot provinces – the Western Cape (79%), the Free State (74%) and Gauteng (69%) – sold cigarettes below the Minimum Collectible Tax (MCT) of R22.79, proving that the manufacturers could not have paid due taxes on these products.

“The brands being sold illegally are the usual suspects,” says Abramjee. “Those registered to Zimbabwe-based tobacco giant Gold Leaf and FITA member Carnilinx dominate the illegal market. It’s patently obvious what is going on and who is responsible, but this daylight robbery is permitted to continue.

“We see a lot of fuss and publicity about seizures of illicit cigarettes amounting to a few million rand. But that is a tiny fraction of the estimated R19 billion that criminal manufacturers are now stealing from the state every year.

“We need SARS and SAPS to follow the money back to where these cigarettes are made. They should close down the factories, arrest those in charge and lock them up. Only then should they start claiming to have done their job of collecting money owed to the South African people.”

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