R4bn lost to illegal cigarette traders

2012-03-22 19:00
Johannesburg - About 700 000 contraband cigarettes were seized across the country in March, the Tobacco Institute of SA (Tisa) said on Thursday.

"Illegal traders are costing the country as much as R4bn in excise duties and VAT not paid," Tisa chief executive officer Francois van der Merwe said.

"It is also crippling the legal tobacco industry as the illegal cigarettes are mostly sold at prices that do not even cover the taxes."

Because of this, the industry's volumes had declined by more than 30% in the past 10 years, he said. This had resulted in the closure of factories and job losses.

On March 6, the SA Revenue Service seized over 100 000 contraband cigarettes in Mitchells Plain, Cape Town, said Van der Merwe.

The following day 140 000 illegal cigarettes were confiscated from another reseller in Cape Town.

Police seized 250 000 contraband cigarettes in Durban, and on March 8 and 9 over 170 000 cigarettes were confiscated in eastern Gauteng.

Van der Merwe said people buying these cigarettes were supporting crime.

"This is money that could be spent on education, poverty alleviation as well as much-needed infrastructure development. Consumers looking to save money by purchasing cheaper and often illicit cigarettes are unwittingly supporting crime.

Read more on:    economy

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