Friday 14 August 2020 – URGENT action is needed to tackle the corrupt syndicates who have grabbed control of the cigarette market during the 20-week sales ban, Tax Justice South Africa (TJSA) warns today.
“Even if the tobacco ban is lifted soon, massive criminal networks have gained full control of the market and have been earning R100 million a day,” says TJSA founder Yusuf Abramjee.
“The tax-free billions they have amassed are being used to strengthen their supply routes and embed themselves in communities.
“To avoid further damage to the economy and the lives of honest citizens, the ban should be lifted immediately and measures taken to stamp out these illegal enterprises once and for all.”
Latest research by experts at the University of Cape Town (UCT) shows that the tobacco ban has failed to stop people smoking, but restricted availability means that some lesser-known brands now dominate the market.
Based on the UCT survey, more than half of the illegal cigarettes being smoked during the ban are brands made by Gold Leaf Tobacco Corporation, Carnilinx and Best Tobacco Company.
These companies, who are all members of the Fair-Trade Independent Tobacco Association, have seen their individual market share soar by up to 600%.
Brands belonging to multi-national companies, such as British American Tobacco SA (BATSA), Philip Morris International, Japan Tobacco International and Imperial Tobacco, have witnessed their market share fall from 77% to below 20%, according to the report by UCT’s Research Unit on the Economics of Excisable Products.
BATSA, whose brands account for just 8.7% of sales during the ban, had a market share six times higher before lockdown, the study found.
“It is obvious who are the beneficiaries of this failed prohibition,” says Abramjee. “It’s not our health services, as cigarettes are readily available. It’s not smokers, who are being impoverished by sky-high prices. And it’s certainly not South African citizens, who are being denied R35 million in vital taxes every day.
“It’s the criminals in illicit trade who have been empowered to amass billions, while the Government turns a blind eye.
“But enough is enough. The evidence is there for all to see and the culprits must be called to account.
“Trading regulations need to be enforced and the Government must ratify the WHO illicit trade protocol, tobacco factories should be properly audited, our borders must be strengthened and the ban should be lifted immediately.”