Lesotho confiscates over R1m worth of dodgy SA cigarettes

The confiscation of 380,000 RG cigarettes marks the biggest bust on illicit cigarettes in Lesotho in the past five years.

Lesotho Revenue Authority (LRA) has released a statement confirming the confiscation of 380,000 illicit cigarettes at the Maseru Bridge on Sunday night.

The cigarettes were worth just over a million Loti, which is a similar amount in rands.

“This is the biggest single bust on illicit cigarettes in Lesotho in the past five years,” the statement said.

The statement said the cigarettes were the RG brand, which they say was classed as an illicit cigarette brand as it was sold below the legal M20 (or R20,02) threshold.

RG is manufactured by Gold Leaf Tobacco, a company often accused of failing to pay taxes on their products.

READ MORE: How the illicit cigarette industry has beaten Sars

A report released in September by the Tobacco Institute of Southern Africa (Tisa) found that illicit tobacco companies are responsible for R7 billion per year in tax evasion and that Gold Leaf Tobacco is responsible for producing 75% of these tax-dodging cigarette brands.

The report found that RG, selling locally for an average of just more than R10 per packet, is now the second largest brand in SA after Peter Stuyvesant.

The LRA said their policy is to destroy cigarettes which are found to be counterfeit.

Yusuf Abramjee, who became vice president of Crime Stoppers International (CSI) at the beginning of November, took to Twitter to congratulate LRA, saying: “It’s great to see [them] clamping down on South African illicit cigarettes.”

“Much appreciated, we are working hard to control the illicit substances from entering the country,” was the response of the authority’s official Twitter account.

A Moneyweb article about the Tisa report on illicit cigarettes asked why Gold Leaf Tobacco is still able to operate after having been found to have evaded tax.

“In 2015, a judgment in the Eastern Cape High Court found that tobacco products selling for prices less than the minimum collectable tax must be illegal. In that matter, relating to sales of Gold Leaf Tobacco Company’s Savannah brand at R8 per packet – even then well below the tax owed to the South African Revenue Service (Sars) – the judge found that “the logical inference to be drawn is that no excise duty was paid in respect of the cigarettes in question’,” read the report.

“The question remains: how it is possible to sell packs for less than the payable tax, year after year?

“According to Google Maps, the Sars office in Randburg is 18.9 km from Gold Leaf Tobacco’s head office in the Meadowview Office Park in Sandton. A tax inspector can literally stop by on their way to work tomorrow morning to ask how they are able to sell cigarettes for way below the minimum tax payable and still remain in business.”

(Compiled by Daniel Friedman)

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