Big cost as smokers carry on puffing

ILLICIT: SMUGGLERS COIN IT AS MINISTER STANDS FIRM

Government lifted tobacco prohibition for Level 4 of lockdown before it was overturned.

As old foes, the Fair Trade Independent Tobacco Association (Fita) and British American Tobacco South Africa (Batsa), sharpen their legal challenges to Cooperative Governance and Traditional Affairs Minister Nkosazana Dlamini-Zuma’s overturning President Cyril Ramaphosa’s lifting of the cigarette ban, smugglers are making merry.

In a few short weeks, cigarette smugglers have picked up their pace with gusto.

Much like drug mules being bust with relatively minor amounts of drugs to divert attention away from the big consignments, so too are reports of arrests for illegal cigarettes being found, with occasional arrests.

Yet, for the most part, smokers continue to puff away, some on dwindling stocks purchased before the lockdown began on 27 March, others on brands they’ve never heard of before.

Now, the extended ban will allow smugglers to refine their methods, settle routes and solidify contacts, said former SA Revenue Service (Sars) group executive Johann van Loggerenberg.

“Post 2014 ... the increase in illicit trade went up by an estimated 30% to 40%,” he said. “Government lost complete control of it and, thanks to the shutting down of Sars’ investigative ability, investigations are moving off a low base in respect of knowledge, capacity and capability.”

Existing syndicates were in overdrive, charging up to R30 million a container and cartons on the illicit market were going for more than R1 000.

“Existing drug and other crime syndicates have expanded and diversified their products to include cigarettes,” Van Loggerenberg said. “Brands available are those of multinationals, of which Batsa is the only local manufacturer, all local manufacturers and then foreign brands from as far [away] as Central Africa to Europe, which are never really seen on local market.”

And while Dlamini-Zuma poopoos any idea of collusion, Batsa’s announcement it would tackle the ban has been met with little enthusiasm by underground market traders, Van Loggerenberg said.

Whether the actions of the two tobacco giants would be combined remained to be seen, said Fita chair Sinenhlanhla Mnguni.

“My understanding ... is that they are issuing their application in Cape Town, whereas we will be launching in Pretoria,” he said. “There are talks between our legal representatives though.”

Batsa said it had paid R13 billion to the government in the form of excise, corporate, income and other taxes for 2019.

“The Treasury is losing R36 million ... in excise taxes every day that the ban on cigarette sales continues,” Batsa said.

“This explains why Finance Minister Tito Mboweni supported President Ramaphosa’s announcement that legal cigarette sales should resume under Level 4.”

Batsa gave Dlamini-Zuma until 10am today to overturn the ban. –