The court battle over tobacco sales will hopefully lead to “much-needed transparency” as to why the government is still banning the sale of tobacco products.
Business Against Crime managing director Tebele Luthuli says the continuing ban has so far been justified on the basis of studies that are not “shared with citizens in a transparent way”.
That reaction comes after a verdict last week was brought in the lawsuit brought by Fair Trade Independent Tobacco Association (Fita) against Nkosazana Dlamini-Zuma, Minister of Cooperative Governance and Traditional Affairs.
A second court case against the cigarette ban, that of British American Tobacco South Africa (Batsa), will only be heard on June 24.
Business Against Crime’s biggest objection to the cigarette ban is that it promotes the illegal economy, but the organization also says there is no social distancing from selling illegal products.
The illegal cigarette trade has been a major problem for South Africa for many years now, but the restriction has caused it. Even usually law-abiding citizens have turned to the black market.
Where a loose cigarette previously cost R1, it now costs up to R5, Luthuli says. A carton of cigarettes now costs up to R1 000 on the black market in Johannesburg and up to R3 000 in Cape Town.
Recent polls among smokers have yielded divergent results on whether smokers buy illegal cigarettes. Technology company M4Jam found in a poll of about 2,000 smokers 52% refused to raise excessive cigarette prices, but a survey conducted by the University of Cape Town among more than 16,000 people found 90% did buy their smokers illegally – and most expensive.
Francois van der Merwe, chair of the Tobacco Institute of Southern Africa (Tisa), said last year – long before the Covid 19 crisis – that the government was losing potential tax revenue of more than R20 million a day due to tobacco companies that are not completely honest about cigarette production and sales figures.
Edward Kieswetter, commissioner of the South African Revenue Service, recently said that R1.7 billion of excise was lost only in April when cigarettes and liquor could not be sold.
Batsa, the country’s largest manufacturer of tobacco products with products such as Peter Stuyvesant, Dunhill, Kent and Rothmans, says it alone collects R214m of excise a week which is paid over to the state treasury.
Luthuli says given the pressure on the state treasury, the government can’t afford to lose revenue.