LETTER: Cigarette taxes aren’t the problem
It is the weakness of SA’s tax administration that caused the problem, and only addressing that weakness will help recover the tax losses.
We read "Smokin’" by Tim Cohen (Cover Story, November 22-28) with great interest. As our study estimating the size of the illicit cigarette market is referred to in the article, we would like to clarify a few issues. We agree with much of the content of the article, but disagree about the reasons for the recent increase in illegal cigarettes sales in SA. The article incorrectly adopts the industry’s narrative by pointing to tobacco taxes as the culprit and cause of the rise in illicit market share. It misses the point that the real problem of "illicits" in SA only began when cigarette taxes were rising minimally, barely above inflation. Taxes are not to blame here. It is the weakness of SA’s tax administration that caused the problem, and only addressing that weakness will help recover the tax losses. We see the same situation all over the world. Cambodia, for example, has one of the lowest cigarette taxes in the world, but has a booming illicit cigarette market because its tax admi...
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