South Africa’s legal tobacco industry welcomes the news that the South African Revenue Service (SARS) has bust another consignment of illicit cigarettes – the second in less than a month.
Members of the South Africa Tobacco Transformation Alliance (SATTA) have suffered greatly because of the illicit cigarette networks, and every attack on the smugglers and distributors is appreciated by our members.
The most recent bust – involving the destruction of more than R17-million worth of illicit goods – sends a good signal to members of SATTA, and a bad signal to the smugglers.
It comes on the back of the recent destruction of more than R30-million worth of illicit cigarettes confiscated at the Beit Bridge border post.
These actions are a clear sign that the Inter-Agency Working Group set up by Government is working, and that an integrated approach is the best way to deal with illicit tobacco.
SATTA is also encouraged by the statistics released by SARS this week which show a total of 1 150 seizures — equating to 181 million cigarettes — in the 2020/2021 financial year with an estimated value of R219-million, as well as R92 182 of seized tobacco.
This amounts to a “potential prejudice in duties and VAT estimated at over R163-million”, according to SARS – which shows, if nothing else, the massive harm caused to the economy by the illicit tobacco networks.
Of course, no-one can ignore the harm caused to our entire value chain by the illicit traders. Dozens of farmers have gone out of business and many more are in financial jeopardy because of the increased market share of the illicit sector since the start of the COVID-19 lockdowns.
In this regard, we strongly endorse the warning issued by SARS in terms of the damage caused by illicit goods, and tobacco products in particular.
As SARS said in its media statement this week, illicit goods:
- Reduce the revenue the country collects, which is needed to provide basic services to all South Africans including the poor and vulnerable.
- Destroy local industries, leading to factory closures, job losses and further erosion of the tax base.
- Contribute to higher levels of criminality, including bribery and corruption, as well as drawing the country into various syndicates of organised crime drug-smuggling, gun-running and human trafficking.
Although these developments are a step in the right direction, we have to caution that it is still only a drop in the ocean, and much more is required to stem the tide and make a meaningful impact. Reality is that SARS is losing around R1.5 billion per month which is devastating to SARS and the legal industry.
SATTA will continue to engage with SARS on other steps which can be taken to curb illicit cigarette products. We are particularly keen to see the ringleaders behind bars.
SATTA’s members go about their business in a law-abiding way and pay their taxes, and it distresses us that the tobacco industry continues to be undermined by the illicit traders, whose identities are well-known to SARS and the law enforcement authorities.
They are taking food from our mouths and killing our business.
We also repeat our call for a commission of inquiry into the activities of these criminal networks and pledge our full support.
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