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Press Release

TJSA urges investigation of all cigarette firms after IPSOS exposes rampant illicit trade

By March 18, 2021No Comments

Tuesday 9 March 2021 – EVERY tobacco company in the country should submit to a comprehensive official investigation in the wake of a damning new report that shows South Africa is being swamped by illicit cigarettes, says Tax Justice SA (TJSA).

A major study by market researchers IPSOS, released on Monday, reveals that, in some provinces, three out of every four retail outlets are selling a pack of 20 cigarettes below the Minimum Collectible Tax Rate (MCT) of R20.01, set by law.

“This is nothing less than organised crime, which is robbing decent South Africans of billions of rands desperately needed to save lives and rebuild our shattered economy,” says TJSA founder Yusuf Abramjee.

“Instead of paying lip service to the rule of law, South Africa’s tobacco companies must face a full official audit to establish how illicit cigarettes bearing their name are able to flood the market.

“If any manufacturer fails to pass that test, their factories should be closed down and all their brands should be seized and removed from the market immediately.”

The IPSOS mystery shopper survey of retail outlets, ranging from spaza shops to supermarket chains, across the country, reveals:

  • Almost half (41%) of outlets nationwide sell cigarettes below MCT
  • That figure jumps to three-quarters in the Free State (76%) and Western Cape (73%) and 62% in Gauteng
  • The lowest purchase price for a pack of 20 was R9.00, and for a 10-pack carton the price dropped to just R6.30 per pack
  • Half of the packs bought below MCT were brands made by Gold Leaf Tobacco Corporation, with its Remington Gold, manufactured in Zimbabwe, dominating
  • Two out of three (64%) retailers nationwide sell cigarettes below R25, a price that suggests due tax is still not being paid, once the costs of production and distribution are factored in

“It’s obscene that Government has just announced cuts in spending on hospitals and social grants, while criminals are pocketing billions by dodging these taxes,” says Abramjee.

“Children are going hungry and lives are being lost as a direct result of this brazen flouting of the law, which has exploded in the wake of the lockdown ban on tobacco sales last year.

“In the face of such looting, the cigarette companies should be obliged to show that their books are in order and SARS must be empowered to follow the money, root out the perpetrators and lock them up.”

The full IPSOS report, commissioned by British American Tobacco South Africa, is available here: http://www.batsa.co.za/group/sites/BAT_A2ELAD.nsf/vwPagesWebLive/DOBYWCXR/$file/BATSA_IPSOS_Price_Benchmark_Survey_Report.pdf?openelement

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