Tobacco association announces it will launch a legal challenge of cigarette ban

In a press statement on Friday, the Fair-trade Independent Tobacco Association (Fita) announced it would be mounting a legal challenge against the prohibition on the sale of cigarettes during the state of disaster announced to combat the spread of Covid-19.

Chairperson Sinenhlanhla Mnguni said that after consulting with their legal team they had come to the decision to approach the courts to reverse the ban.

“This decision was not taken lightly and we had hoped that a logical solution in the best interests of all concerned would be arrived at without the need for litigation,” said Mnguni.

Fita said they supported efforts by the state to implement whatever mechanisms were “considered prudent in the pursuit of compliance, national order, and ensuring the safety of its citizens during the lockdown period in order to combat the current pandemic we face”, but they could not agree that a cigarette ban should be part of that.

“We tried long and hard to engage with government on this issue but our pleas rather unfortunately fell on deaf ears.

“The simple truth is that the current situation cannot be endured for much longer by the various role players along the tobacco industry value chain without severe consequences for all. This includes farm workers, factory workers, informal traders, and the many other ordinary South Africans who rely on the tobacco industry for a living, and whose livelihoods are currently at stake. Allowing the current situation to continue indefinitely will in all likelihood lead to job losses and/or loss of income for many along the tobacco industry value chain.”

Mnguni pointed out that people had started being assaulted and murdered for cigarettes.

“Citizens are resorting to acts of criminality in order to procure cigarettes. Citizens are also moving all over the country and across the border into neighbouring countries, as has been reported, in order to purchase inter alia cigarettes and alcohol. This is completely against the objective government sought to achieve when implementing the lockdown period and the accompanying ban of the sale of certain goods.

“We are also seeing the illicit trade flourish whilst the legitimate tobacco industry is prevented from participating. This, in our opinion, is to the detriment of the fiscus, the tobacco industry across the value chain, and South Africans at large in that our country is currently in dire need of funds it could access from industries such as ours.”

Mnguni pointed out that government was also missing out on the billions normally earned from taxes on cigarettes.

“Government is losing, according to our estimates, in the region R1.5 billion a month on excise alone with the ban on the sale of cigarettes in place. When you factor in VAT, corporate income tax and other tax types the figure becomes even greater. This at a time when we are already dealing with huge deficits in as far as our tax collections are concerned with the recent announcement that [the SA Revenue Service] collected R 66.2 billion less than estimated for the last financial year.”

He said the “exponential growth of the illicit trade would also undo all the hard work done by government and industry in combating this issue, and potentially result in the criminal syndicates behind it growing their resources and networks, making it difficult for the legitimate industry to play on equal ground once the ban on the sale of cigarettes and other tobacco products is lifted”.

“The long and short of this all is that the regulations have not stopped people from buying cigarettes during the lockdown period. People are sourcing cigarettes and other goods from underground markets to the detriment of the fiscus. They are also in this regard acting contrary to government instructions that citizens are to avoid excessive movement, which we have been advised leads to a higher possibility of the spread of the coronavirus.”

Fita requested that government authorise, at a minimum, the distribution and sale of cigarettes at retail stores, spaza shops and filling stations.

They complained that there had been no engagement with industry in relation to this issue.

Mnguni said Fita therefore regretted having to take legal steps, but they felt government had left them with no other option.

Fita’s statement came shortly after President Cyril Ramaphosa’s legal team told the Gauteng Liquor Forum in a letter that the president would not entertain the lifting of a ban on alcohol sales. He instead directed liquor sellers to seek economic relief through programmes offered by government.

In a seven-page letter from the president’s lawyers, the forum was told the reason alcohol sales could not be considered an “essential service” was because there is a link between alcohol and traumatic injury that state hospitals could not afford to be treating during the Covid-19 crisis. They pointed out that tavern owners were among many businesses affected by the shutdown and they could not expect special treatment.

“In the absence of a lockdown, the worst effects of the spread of Covid-19 are likely to be felt in those very sectors of society that you claim to represent – those who live in the poorest conditions … the most vulnerable in society,” the letter from government’s lawyers continued.

The Gauteng Liquor Forum, a non-profit organisation of stakeholders representing about 20,000 micro and small businesses, earlier argued in their own letter that the lockdown extension to 30 April would “most likely” ruin their businesses.

They called on the president to relax alcohol restrictions and allow shebeens to operate between 9am and 6pm on weekdays, and close at 1pm on Sundays and public holidays.

They gave Ramaphosa an ultimatum to respond or face a court challenge. It is now possible that their threatened Constitutional Court case might now go ahead, though it has doubtful prospects of success.

Ramaphosa’s lawyers denied that the lockdown “and the regulations and/or laws in terms of which it is imposed, are unconstitutional”.

(Compiled by Charles Cilliers)