ILLICIT CIGARETTE TRADE
SA in danger of losing its tobacco-growing industry
Illicit trade in tobacco and other products has flourished since the skills exodus that effectively eliminated the investigative and enforcement capacity of the SA Revenue Service since 2014
SA is at risk of losing its tobacco-growing industry following a decision by British American Tobacco Southern Africa (Batsa) to notify the country’s only tobacco processor, Rustenburg-based Limpopo Tobacco Processors (LTP), that it may have to consider buying foreign tobacco should the illicit industry gain further traction. Batsa has written to LTP, which buys and processes most of SA’s tobacco crop from about 100 commercial farmers and about 150 emerging farmers, pointing out deteriorating market conditions for the tax-paying portion of the industry. In its letter, Batsa says that sales volumes have declined from 15.2-billion cigarettes in 2016 to an estimated 11.5-billion in 2018, "solely as a result of the ever-increasing availability of illegal cigarettes for R10 per pack on average". Academics and industry sources estimate that 40% of tobacco sales are produced locally but sold without the payment of excise tax, constituting a loss to the fiscus of about R8bn a year. The toba...