The South Africa Tobacco Transformation Alliance (SATTA) has formally objected to the Department of Health’s consultation process around a new tobacco bill, describing it as “a sham”. SATTA lodged its objections during an online consultation process with the Department, which was convened as part of the statutory socio-economic impact assessment (SEIA) required before the Bill can be processed.
SATTA chairman Ntando Shadrack Sibisi pointed out to Department officials that more than 21 000 comments had been received when the Tobacco Bill was first published for public comment – and yet the latest version of the Bill remained unchanged. “Is the Department honestly saying that none of the 21 000 comments made in 2018 were of significance or meaning?” he asked. “Or did the Department not deem those comments to have merit? If so, why bother with this consultation process? It feels like a mere box-ticking exercise, and we believe that makes this process a sham.”
Sibisi also argued that it was “dangerous and reckless” to consider imposing the sort of restrictions proposed in the Bill at a time when the entire legal tobacco industry is “currently in the intensive care unit, with massive losses in income, revenue and jobs”.
“It is common knowledge that the industry has been devastated by the ban on cigarette sales that was incorrectly and unilaterally introduced by Government during the COVID-related lockdowns, yet this has been completely ignored in the framing and proposed implementation of the Bill,” he said.
“It is also common knowledge that the illicit tobacco sector – the non-taxpaying, non-regulated criminal networks who ran riot during the lockdown – have effectively taken over the market. The tobacco market in 2021 is fundamentally different from the tobacco market that existed in 2018, and that needs to be taken into account in any new approaches to legislation.
SATTA proposed that the Department of Health’s process be abandoned, and that a detailed evidence- based impact assessment be commissioned from an independent economist, covering the full value chain and based on the current dynamics of the industry.
SATTA also tabled new independent research into the impact of the lockdown, conducted by NKC African Economics, which shows the following:
- Excise receipts are down 34.9% year on year.
- Illicit sales are up 36% year on year.
- For the first time, illicit sales outnumber legal sales – with the criminal networks now holding 51% of
the market, compared to 36% in 2019.
As Sibisi put it: “The rogues have really celebrated the lockdown, and continue to do so. Not only have they increased market penetration, they have put up their prices: on average, by around 15%, but still largely sell below the Minimum Collectible Tax of R21.61”.
Sibisi also outlined the impact of this on the legal tobacco sector – which he described as being made up of “hard-working, law-abiding and tax-paying farmers, processors and manufacturers”.
“The impact has been massive over the past year, and the signs of recovery are slight, if any. Our contribution to GDP declined by R3.7-billion. 35 000 jobs were lost in the industry, and 49 000 across the sector.
“It is also no secret that the Government lost massive amounts of excise revenue as a result of its decision to impose a lockdown ban on sales,” he added. “According to the NKC research, no less than R17-billion in tax revenue was lost due to the growth of the illicit sector during 2020.” SATTA undertook to make this research available to the Department, but emphasised its belief that an independent impact assessment was vital.
“We firmly believe that South Africa needs an evidence-based approach to the future of the cigarette and tobacco industry, rather than the path of persecution and punishment that is being followed at the moment.
“We cannot overstate the threats that exist to the legal tobacco sector, and the threats posed by the illicit sector. These, in our view, should be the key factors that inform any new approaches to legislation. They are called, in our language, economic reality.”
SATTA concluded its presentation with an appeal that President Cyril Ramaphosa be made aware of the full implications of the Tobacco Bill as it stands.
“We do not believe that a Government, headed by a President such as ours – who has a deep commitment to economic growth, job creation and agricultural development – would agree with the Department of Health effectively passing the death sentence on a crucial, law-abiding economic and
agricultural sector such as the tobacco industry.
“We also do not believe that a Government, headed by a President such as ours – who has a deep commitment to social compacts, consultation and joint solutions – would condone a sham process such as the one being played out today.
“The Department’s process is a sham, a box-ticking exercise which makes a mockery of all the key values that President Ramaphosa stands for, and we wish to lodge our strongest possible objection to it,” said Sibisi.
“We support successful tobacco control measures and an eventual reduction in consumption. But the current chaos in the market must be the first priority.
“The Government should first ratify the long outstanding World Health Organisation (WHO) protocol on illicit trade, address the illicit trade which is now bigger than the legal market, and only then introduce new legislation which will have a chance of achieving its objectives.”
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Note to Editors
The South Africa Tobacco Transformation Alliance is the voice of the legal tobacco industry. It represents the entire tobacco product value chain, including tobacco farmers, processors and manufacturers. SATTA’s members are the Black Tobacco Farmers’ Association, Limpopo Tobacco Processors, Tobacco Producer Development and British American Tobacco South Africa.