Illicit cigs costing billions in lost tax

ABOUT two billion illicit cigarettes are on sale in South Africa, and according to the Tobacco Institute of Southern Africa (Tisa) this trade has resulted in a tax revenue loss of R22 billion for the country since 2010.

Tisa chief executive Francois van der Merwe said while the manufacturing of counterfeit cigarettes, or fake merchandise, was a lesser problem facing South Africa, tax evasion by manufacturers was the key concern.

Van der Merwe said some manufacturers were evading tax by declaring fewer cigarettes than they produced and sold.

About 60 percent of illicit cigarettes are produced by manufacturers in South Africa, while about 30 percent were smuggled across the border from Zimbabwe, he said.

“South Africa is rated among the top five countries globally with the highest incidence of trade in illegal cigarettes. Exploitation of the ineffective integration of import and export procedures between countries is facilitating smuggling activity,” Van der Merwe said.

Following a tip-off, the police’s K9 unit searched a safari tour truck in Brackenfell last week and found illicit cigarettes.

Police spokesperson Andrè Traut said when police searched the truck, they discovered a false compartment between the floor and the luggage storage which stretched the entire length of the vehicle. Cartons of illicit cigarettes were found.

Traut said cartons of illegal cigarettes were also found in a toilet in the warehouse where the truck was parked.

Police confiscated a total of 4 600 cartons of cigarettes estimated worth R1 million.

Two people, aged 39 and 30, were arrested. The suspects will appear in court once they have been charged.

SA Revenue Service (Sars) spokesperson Luther Lebelo welcomed the bust. He said according to industry calculations, annual revenue loss due to the illicit tobacco trade was estimated at between R2 billion and R5 billion a year

“Any bust that prevents illicit goods from entering the marketplace is significant as such activities have a negative impact on our economy.”

Van der Merwe said participants in the illicit trade in tobacco products were in most cases linked to, or part of, organised crime syndicates that also trafficked drugs, humans or rhino horn.

“We commend law enforcement for their hard work.”