Cigarette ban spat heats up
COURT CASE: LEGAL FIRMS HIT, ILLEGAL TRADE ON FIRE
No basis in law for such a sweeping interpretation of the Disaster Management Act – Fita lawyers.
And, as Tax Justice SA has pointed out, the illicit trade, which the SA Revenue Service (Sars) worked so hard to stamp out, is back with a vengeance. This time it won’t go away easily, which means a permanent loss of revenue to Sars, which has lost about R2 billion due to the ban.
Meantime, the Fair Trade Independent Tobacco Association (Fita), representing mainly smaller producers, says its court challenge against the government ban is likely to be heard two weeks from now.
It’s being brought as an urgent matter, but the hold-up is on government’s side. It has been ordered by the high court to provide Fita with a record of decision showing how it came to the decision to impose the ban in the first place. This will allow Fita to supplement its affidavit and government will be given a few days to reply to that.
Fita chair Sinenhlanhla Mnguni said: “Whether this ban is lifted by government or not, we have to go through with the case. The real issue here is whether government has the power to arbitrarily shut an industry based on no real data.”
Democratic Alliance leader John Steenhuisen told eNCA that Cooperative Governance and Traditional Affairs Minister
Nkosazana Dlamini-Zuma appears to be on a personal crusade when it comes to the cigarette ban and is opposed by other ministers in the Cabinet.
The decision to impose the ban has been made for “health reasons”, but there is no basis in law for such a sweeping interpretation of the Disaster Management Act, according to Fita lawyers. Several lawyers said the government should be on a hiding to nothing on this case.
Simon Rudland, co-owner of Gold Leaf Tobacco, said the company’s Johannesburg factory could operate at 30% staff capacity, but only for export.
“I don’t know how much longer we can continue with this and at what point we have to file for business rescue.”
In support of Fita’s court case, Gold Leaf CEO Ebrahim Adamjee outlined the impact of the ban on the company: in April and May 2019 it paid R437 million in excise to Sars, and R60 million in VAT.
The loss to Sars this year for the same two-month period is likely more than R510 million, in addition to a daily loss of profit of R801 000 to the company, threatening the future of 354 workers.
That story is being repeated across the tobacco manufacturing sector.
We have to go through with the case