FITA Press Release 28 October 2020

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Press release – FITA – for immediate release

We condemn the uninformed and precipitous statement by trade union federation COSATU supporting a 100% tax hike on tobacco products.

It is quite mind-boggling that there are sections of society pushing government to increase excise on cigarettes. Such a move would be nothing short of disastrous for both the fiscus & the legitimate tobacco industry and the thousands of people employed along its value chain.

It is well-documented that the smuggling of cigarettes from our neighbouring countries through our porous borders into South Africa is already out of control and continues unabatedly. The challenges in as far as resources and capacity are concerned facing those who are deployed to protect our borders is also well-documented. One also has to be mindful of the fact that the South African cigarette market has over the last few years seen a significant shift from a market where consumers were brand conscious to one where consumers are now price conscious. Implementation of the policies mooted by the likes of COSATU will create an even bigger demand for the cheaper cigarettes, with an overwhelming majority of such products likely to come from non-compliant sources who do not contribute to the state coffers. As evidenced by what was witnessed during the lockdown period, increasing excise tax on cigarettes substantially will only serve to encourage those who ply their trade in the illicit economy, which criminal syndicates have over the years significantly improved their networks and resources to a point where law enforcement agencies are currently unable to tackle them.

We therefore cannot even begin to have such a discussion such as the one pushed by COSATU and the like without inter alia strengthening capacity within law enforcement agencies to counter the rampant smuggling of cigarettes into the country and we strongly encourage Minister Tito Mboweni to ignore such calls.

Issued by Fair-trade Independent Tobacco Association Chairperson: Sinenhlanhla Mnguni 28 October 2020

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

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