Tobacco companies to SARS: help us help you by tackling illegal smokes

Illegal cigarette trade. (Photo: iStock)
Illegal cigarette trade. (Photo: iStock)

The Tobacco Institute of South Africa has again urged the SA Revenue Service to up the fight against the illicit tobacco trade, saying 55% of the tax body’s recently-announced shortfall could have been redeemed if it had stronger interventions against unlawful trade in cigarettes. 

On Monday SARS announced a preliminary tax revenue shortfall of R14.6bn for the year ended March 2019. 

The institute, which represents tobacco product manufacturers and growers, has been lobbying for SARS and other agencies of government to clamp down on illicit tobacco products, which it says are non-compliant with tax laws.  

In a statement on Wednesday, the institute said that by 2018 the country was losing more than R8bn per year in evaded taxes due to the exponential growth in the sale of illegal cigarettes

The institute's chair, Francois van der Merwe, said the revenue shortfall highlights the tough job the agency's incoming commissioner Edward Kieswetter will face. 

"The illegal cigarette trade in South Africa, which accounts for over R8bn in lost tax revenue this year, is one area where the new commissioner could make an almost immediate and significant difference to our country at this critical time," he said. 

SARS acting commissioner, Mark Kingon, said earlier in the week that the agency's illicit economy unit was focusing on "serious non-compliance" in the cigarette and tobacco industry

"Special efforts are also underway to further strengthen controls and improve compliance within the tobacco and cigarette industry," he said.  

The institute said what it described as the biggest brand in South Africa - RG, made by the Gold Leaf Tobacco Corporation, was "selling for an average price of just R10 per pack".

"This selling price is merely just over half of the minimum collectible tax on each pack of 20 cigarettes," the statement said.

Gold Leaf boss Simon Rudland has in the past  denied similar allegations. 

"All our brands are registered with SARS and all excise [taxes] are paid on our products," the company told Fin24 in November. 

ZAR/USD
16.76
(-0.05)
ZAR/GBP
21.18
(-0.23)
ZAR/EUR
18.94
(-0.09)
ZAR/AUD
11.65
(-0.04)
ZAR/JPY
0.16
(+0.04)
Gold
1798.11
(+0.03)
Silver
18.69
(+0.17)
Platinum
824.50
(+0.30)
Brent Crude
43.14
(+2.10)
Palladium
1961.36
(+0.61)
All Share
55417.89
(-0.66)
Top 40
51154.08
(-0.74)
Financial 15
10472.31
(+1.28)
Industrial 25
76134.69
(-1.67)
Resource 10
52483.78
(-0.20)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 1968 votes
I am taking a hit, but should be able to recover in the next year
23% - 2579 votes
My finances have been devastated
34% - 3826 votes
It's still too early to know what the full effect will be
25% - 2757 votes
Vote