Tobacco industry prepared the ground for illicit cigarette trade
The primary problem is the criminality of firms involved in illicit trade, and the lack of capacity and/or will at the SA Revenue Service to stop them.
In the past year the illicit trade in cigarettes has received much attention in the media, with self-interested parties promoting their own narratives. One example is the prominent hashtag campaign #TakeBackTheTax, which claims government loses about R7bn in excise tax revenues every year. The campaign was orchestrated by the Tobacco Institute of Southern Africa (Tisa), a body representing major tobacco manufacturers including British American Tobacco (BAT) and Phillip Morris SA. The Nugent Commission highlighted the growth in illicit trade in cigarettes as one of the consequences of the institutional meltdown at the SA Revenue Service (Sars). Just recently BAT SA commissioned Econometrix, an economic consultancy, to write a report on tobacco taxation. This urged the government not to increase the excise tax on cigarettes because it would lead to less, rather than more, tax revenue.
With the national budget due to be presented on Wednesday, the timing of this report was clearl...
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