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Press Release

Smuggling busts expose cigarette companies’ evasion of the truth

By July 28, 2021No Comments

Sunday 11 July 2021 – CRIMINAL cigarette manufacturers are mocking justice by paying lip service to the tax laws as illicit tobacco floods the country, Tax Justice SA (TJSA) warns today.

The extent of their scorn for authorities has been evident this weekend as officials seized several MILLIONS OF RAND worth of smuggled Remington Gold just ONE DAY after Gold Leaf Tobacco (GLTC), the company that makes the brand, loudly claimed it was above reproach.

In the space of just days:

“These busts are massive but, sadly, they’re just the tip of the iceberg,” said TJSA founder Yusuf Abramjee. “Shops across the country are full of these illicit cigarettes, which rob us of billions in desperately needed taxes.

“They expose the shameless dissembling of Gold Leaf, who claim they’re victims of a smear campaign.

“Just a day after Gold Leaf put out a statement declaring they’re squeaky clean, cops seize a car park-sized load of Remington Gold that had been smuggled into South Africa at the Beitbridge border. We’d love to hear Gold Leaf’s statement about that.

“They have a lot to explain, which can’t be brushed off by simply playing innocent victims. Independent research consistently shows that Remington Gold and other brands owned by Gold Leaf are leading the illegal price war in what has become the biggest cigarette black market in the world.”

One investigation by market researchers IPSOS found that a shocking 85% of GLTC-owned brands bought in the survey were sold below the minimum collectible tax (MCT) rate of R21.60 per pack.

Almost every single pack (99%) of Remington Gold purchased in the survey was below the MCT. Some were sold for as little as R10.

“GLTC brands are by no means the only offenders and nearly half of all stores nationwide now sell cigarettes below MCT.

“More than 25 weeks have passed since we handed a dossier of evidence to SARS and SAPS exposing this brazen criminality. In that time, an estimated R5 billion tax has been stolen, yet not a single manufacturer has been arrested nor a factory closed. We need a full investigation into the whole industry.”

In a statement issued through its representative the South Africa Tobacco Organisation (SATO) on Thursday, GLTC said it was endorsing a minimum legal retail sales price of R22 per pack to help officials combat illicit trade.

“That R22 figure itself is ludicrous,” said Abramjee. “If due taxes are paid, that leaves just 40 cents to cover the costs of raw materials, production, distribution and retail margins – and still make a profit. That’s not a sustainable business strategy – it’s a smokescreen for tax evasion.

“Licensed manufacturers across the country are selling cigarettes at prices that mean they must be dodging tax.

“How much longer can our struggling economy afford to be looted of millions on a daily basis? And how much evidence do SARS and SAPS need to take action against these companies?”

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