Allegations that South Africa’s revenue service loses millions from illicit tobacco

In November 2015, this article was published by the Cape Times newspaper:

Roughly R4 billion in South African tax revenue had been lost annually since 2010 due to illicit tobacco trade, it emerged at the annual Anti-Illicit Trade Conference in Cape Town on Tuesday.

“The illicit trade of tobacco means that South Africa continues to be robbed of much needed revenue that could be used for, for instance, funding education,” said Deputy Minister of Police Maggie Sotyu.

Delivering the keynote address on day two of the three-day conference, Sotyu spoke to delegates from over 19 other countries. Her message spoke to the need for law enforcement, business and communities to work together in fighting the illicit cigarette trade and the impact the crime had on, amongst other things, the country’s economy.

Sotyu referred to the annual loss of roughly R4 billion in tax revenue since 2010, saying that it could have been used to tackle South Africa’s education crisis.
South Africa has been listed as one of the top five illicit markets globally, with the highest illicit tobacco incidence in the region. In 2013, 31 percent of all cigarettes consumed in South Africa were illegal. Indicating progress in targeting criminals and syndicates, the percentage of illegal cigarettes smoked in 2015 had dropped to 23 percent in September.

Despite the decline, the negative effects of the illicit tobacco trade remained, such as encouraging corruption and eroding investor confidence.

“We need this place to be the preferred place for investment,” said chief executive of the Tobacco Institute of Southern Africa (TISA) Francois van der Merwe.

Van Der Merwe added that because of the criminal factor, illicit tobacco trade destroyed the social fabric of communities.

“It sickens our country,” he said. “It is like a cancer going through our country.”

Van Der Merwe, echoing Sotyu’s sentiments, said sectors of society needed to work together to fight the trade of illegal cigarettes. He said government needed to protect businesses’ interests while the tobacco sector guaranteed it would do what it could to make government and law enforcement’s jobs easier.

Read the full article here.