Cape Town - It is estimated that one in five cigarettes sold in South Africa is illegal, according to British American Tobacco (BAT) South Africa.
"This equates to an estimated 14.5 million illegal cigarettes consumed daily or 5.3 billion illegal cigarettes consumed in 2014," BAT [JSE:BTI] said in a statement.
"The South African fiscus is the biggest loser as illegal cigarettes do not generate tax. Independent market research shows that illegal cigarettes can cost as little as R10 per pack of 20s, when post this budget announcement, excise and VAT on the excise tax alone will now amount to R14.16 per pack of 20s."
Following Finance Minister, Nhlanhla Nene’s budget speech in Parliament, BAT South Africa said it welcomes National Treasury’s decision to keep excise taxes on tobacco products in line with inflation.
"Our company has continued to express the need for cigarette taxation to be applied with due consideration of the unique circumstances of the local cigarette industry which has among the highest levels of illegal cigarette trade in the world," said BAT.
“We appreciate that National Treasury has taken a considered approach to taxation of cigarettes in this year’s budget, an essential weapon in combating the illegal trade in cigarettes. BAT South Africa, as part of legitimate industry reiterates its commitment to continue to work with government to combat the illegal trade."
BAT urged National Treasury to increase its focus on widening its tax base through more effective enforcement, particularly of cigarette manufacturers and importers who evade taxes.
During 2014 BAT South Africa contributed R14.0bn in overall taxes, amounting to 1.5% of government’s total tax collections.