Friday 16 October 2020 – PRESIDENT Ramaphosa’s promised crackdown on the illicit economy should start with an investigation into the illegal activities of cigarette giant Gold Leaf Tobacco (GLTC) that could be robbing South Africans of millions of rand every day, Tax Justice SA (TJSA) urges today.
TJSA revealed on 13 September that GLTC is selling cigarettes via the internet to private individuals in direct breach of the Tobacco Control Act.
TJSA founder Yusuf Abramjee says today: “It’s been more than a month and, despite promises of an investigation by FITA (the Fair-Trade Independent Tobacco Alliance), Gold Leaf continue to brazenly break the law.
“This week we again bought cigarettes online from Gold Leaf and our single carton was delivered to a residential address. Gold Leaf claim this is an arrangement with a ‘retail trade partner’ but this is just a sham.
“In a matter of seconds, we were able to register as a so-called ‘partner’ using a bogus identity that was never checked. Even a child below the legal age of 18 could buy in this way and pay cash on delivery.”
The fees involved suggest that Zimbabwean-owned GLTC is not paying due taxes on its cigarettes.
The company delivered the carton (10 packs costing R22.50 each) of RG cigarettes to a private home more than 1,000 kilometres from its factory for a total bill of R225. The courier company that was used advertises a minimum fee of R115 per delivery.
The taxes payable on the carton are R203.35 (R174 excise and R29.35 VAT), or R20.33 per pack.
“If Gold Leaf say they are paying their taxes, they’re effectively claiming they are able to manufacture, test, package and deliver door-to-door anywhere in the country for just R2 a pack. And still make a profit.
“That is simply not credible and demands serious investigation by police and SARS officers.”
Brands made by GLTC, including Voyager, RG, Sharp and Remington Gold, accounted for one in every three cigarettes sold on the black market during the 144-day lockdown sales ban. They sold 29 million cigarettes every day at hugely inflated prices.
“If Gold Leaf have maintained their market share they are now selling about 800,000 packs a day, on which a minimum tax of more than R16 million is payable,” Abramjee says.
“That’s almost R6 billion a year that the Government can’t afford to lose in our struggling economy.
“The Treasury said this week that it would be sticking to its excise policy on tobacco products. But that policy is meaningless if Government doesn’t ensure that the excise is collected.
“Outlining his economic recovery plan on Thursday, President Ramaphosa said Government would crack down on the illegal economy. Well, Gold Leaf is a good place to start.
“He should demand that police enforce the law, that FITA accounts for the actions of what was its senior member and that Government fulfil its duty of collecting taxes on behalf of honest South Africans, to whom that money rightfully belongs.”