Thursday 18 July 2024 – THE Western Cape has become the epicentre of South Africa’s rampant illicit tobacco trade, with a shocking three out of every four stores in the province selling tax-evading cigarettes, according to sensational new research.
This alarming figure dwarfs the national average of 59.3%, which itself represents a dramatic increase from just 27% in October 2022.
The unprecedented scale of the illicit cigarette menace – and its seemingly unstoppable rise – is revealed in the latest nationwide survey of 4,600 stores conducted by market researchers Ipsos.
Tax Justice SA founder Yusuf Abramjee said: “These staggering results prove beyond doubt that current measures employed by our authorities are failing to stop organised crime syndicates robbing our nation of over R24 billion in vital excise revenue yearly. They’re getting richer and their illegal operations are getting bigger.
“While the Western Cape is ground zero for this industrial-scale looting, other hotspot provinces are not far behind. The new government must act now to stop them in their tracks and protect our future.”
The Ipsos study paints a grim picture, with illicit cigarettes sold for as little as R5 per pack of 20, a fraction of the minimum collectible tax (MCT) of R25.05 (R21.78 excise plus R3.27 VAT).
This criminal trade is most rampant in the wholesale (82.9%) and informal (72.2%) sectors.
More than half of the illicit purchases in the survey were linked to companies currently challenging the law that mandates the South African Revenue Service (SARS) to install CCTV in their factories. The companies, led by the Fair Trade Independent Tobacco Association (FITA), in May won an interdict in the High Court against 24/7 camera surveillance.
They include Carnilinx, the principal member of FITA, which is owned by self-confessed tobacco smuggler Adriano Mazzotti. Tellingly, almost 90% of brands belonging to Carnilinx were sold below MCT in the survey.
Other companies litigating against SARS’ CCTV rule include Best Tobacco (75% of their brands purchased were below MCT), Afroberg (71%), United Tobacco (91%), Amalgamated Tobacco Manufacturers (50%), Folha (56%), and Protobac (100%). Newcomers Bozza (34%) and Harrison (52%) are also implicated.
Abramjee said: “These shocking figures expose why some cigarette makers are so desperate to block SARS cameras from their premises. The evidence is undeniable: a core group of manufacturers has flooded the market with tax-evading cigarettes for years. They’re stealing billions and want to continue this looting spree unchecked.
“South Africa cannot afford to let criminals govern our country and set their own rules. To preserve the rule of law, the message should be clear, concise and incontestable: install CCTV in your factories, or lose your licence to make cigarettes.”
-ends-