Press release FITA 20 November 2019

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Press release – FITA – for immediate release

We welcome the South African Revenue Service’s (SARS) announcement to members of parliament on 19 November 2019 that it is taking steps to tackle the illicit cigarette trade.

We have over the last 3 months assisted the South African Police Service in seizing over 4 000 master cases of cigarettes, which quantity would attract over R 38 million in taxes alone, smuggled through our various border posts from our neighbouring countries. This amount is only but a minute fraction of the quantities smuggled through our borders monthly, as we see large quantities of these foreign brands in the market without the South African “diamond stamp” and/or health warnings. We have in this regard directed our concerns to the Commissioner of SARS with the hope that he gives this issue the attention it deserves.

We also commend SARS officials in parliament yesterday for their refusal to accept the studies on the size of illicit trade commissioned by Big Tobacco. Academics worldwide are of the view that tobacco industry data on the illicit tobacco trade is not reliable. At present, the tobacco industry continues to fund and disseminate illicit tobacco trade research.[1]

Finance Minister Tito Mboweni recently announced that SARS is to commission a study into the size of the country’s illicit economy, which study would look into inter alia the size of the illicit trade in cigarettes which has dominated talk in the media for the last number of years largely in part due to the desire of multinational tobacco companies to overstate the size of the illicit trade in order to direct the attention of law enforcement agents and the public at large via the media towards their commercial competitors.

We have for long called for this independent study, free of influence from Big Tobacco, to be commissioned in order for government to get a true reflection of the extent of this problem.

Big Tobacco has for a number of years produced reports such as Ipsos report on the scale of the illicit trade in tobacco products to circumvent‎ the strictures of the Framework Convention on Tobacco Control and its International Tobacco Control Policy Evaluation Project. This they achieve by using so-called “cooperation” with authorities as a “Trojan Horse” to gain influence and access to areas of tobacco control which, were the provisions of the Framework Convention on Tobacco Control enforced, would be outside of their reach.

[1] Tobacco industry data on illicit tobacco trade: a systematic review of existing assessments, Allen W A Gallagher, Karen A Evans-Reeves, Jenny L Hatchard, Anna B Gilmore

We note that after Big Tobacco made a big fuss about SARS’ intentions to introduce a track and trace solution to monitor the cigarette trade, something which they had previously called for rather vociferously, Yanga Mputa, chief director of legal and tax design at Treasury, informed members of parliament at yesterday’s meeting that the tender process had been postponed. This shows the extent and magnitude of the influence that these multinationals have over government and its agents.

We have always maintained the view that if one seeks to understand the fiscal risks to the economy, you shouldn’t restrict your views to excise taxes and the illicit trade alone. One needs to look at the entire sector, across all tax types and along the value chain. It is only then that one will be able to determine the complete set of risks in the industry. Big Tobacco is opposed to this as they were previously caught with their pants down to the tune of what is now in excess of R 2 billion when SARS looked beyond just the illicit trade in cigarettes which they are now being forcefully guided towards.

As things stand, and as they have been looked at over the years, the multinationals dictate the public perception. They do this by lobbying at policy levels, financing and directing law enforcement agencies by pretending to be innocent victims through aggressive media and marketing campaigns, biased research papers and industrial espionage. The result is that there is an extreme focus on the illicit cigarette trade only, and hence a perception that this is the sole risk in the industry, which perception of course is very far from true.

Issued by the Fair-trade Independent Tobacco Association: 20 November 2019

For queries kindly contact Monique Vogel t: 072 720 7919; e: Monique@fita.co.za

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