The Portfolio Committee on Trade and Industry today heard that the government has lost an estimated R22bn in taxes since 2010 due to the illicit trade in tobacco. This is money that would have paid in taxes had the trade occurred legally. Almost one quarter of the market is in the hands of the illicit trade.
Committee Chairperson Ms Joanmariae Fubbs said sanctions, such as the closure of illegal manufacturers, were needed. “It seems that some of the manufacturers producing legal tobacco also manufacturers of a percentage of illegal cigarettes. There has to be some intervention.”
The Committee further heard that South Africa is considering moving to plain packaging for cigarettes, which could include graphic photographs with a small branding of the company at the bottom.
The Tobacco Institute of Southern Africa (Tisa) warned against going this route as it is not in line with intellectual property laws. Tisa’s Mr Francios van der Merwe applauded the South African Revenue Services for its interventions, which have led to a decrease in the illegal trade, but appealed for harsher penalties.
Committee Member Mr Adrian Williams, who was a smoker for 20 years but who recently stopped, said he felt tobacco should be banned because of the health risks involved.
Mr Van der Merwe said in response that government has the power to ban tobacco, but cautioned against it. “If they ban or regulate tobacco more stringently and the legal industry dies, the habit will still be around. The illicit trade will grow even faster.”
Ms Fubbs highlighted that the main aim of the Committee is to grow the economy.
Source : Parliament of South Africa