British American Tobacco SA (Batsa) will no longer pursue legal action against government’s decision to ban the sale of cigarettes during the lockdown.
Instead, according to a media statement sent out by the company on Wednesday, Batsa has extended an olive branch saying that after receiving correspondence from government it would like to work together with the national command council overseeing government’s response to the Covid-19 coronavirus pandemic.
“Having considered the response from government and noting President Cyril Ramaphosa’s public statements made on Monday, as a business we have taken a decision not to pursue legal action at this stage. Instead, we seek to pursue further discussions with government on the formulation and application of the regulations under the Covid-19 lockdown,” reads the statement.
The country’s leading tobacco company proposed that cigarettes be sold “in established retail outlets where government’s correct social distancing guidelines are observed”.
“We are convinced that by working together we can find a better solution that works for all South Africans and removes the threat of criminal sanction from 11 million tobacco consumers in the country,” reads the statement.
Batsa also said the restrictions on the legal sale of cigarettes had resulted in the rampant growth of the illicit cigarette trade, which had been “significantly reduced by government and SA Revenue Service’s new commissioner Edward Kieswetter”.
“The significant rise in the illicit trade of tobacco during the lockdown continues to be of great concern and threatens the livelihoods of many who depend on legitimate business to sustain themselves.”
On Tuesday, Kieswetter presented the tax authority’s strategic and performance plans to Parliament’s two finance committees and gave a breakdown of the devastating effect of the Covid-19 lockdown.
He said there was “clear evidence” that the illicit economy was thriving and that there could be a shortfall of R285 billion in tax revenue this year.
Batsa said before the pandemic and the various restrictions imposed, the government and Kieswetter had begun to make progress in tackling the rampant illegal trade in cigarettes, which cost the government more than R10 billion a year.
While Batsa has made a U-turn in its legal challenge of government’s embargo of the legal sale of cigarettes, a second group of cigarette companies is still set to go to court on an urgent application challenging government’s decision.
The new application is being made by the Fair Trade Independent Tobacco Association, which represents medium-sized tobacco manufacturers.
The association demands that government lift its prohibition of tobacco products by striking out the relevant provisions of regulation which allow for the ban.