Illegal tobacco trade is destroying the SA cigarette industry

Experts say high levels of illicit tobacco trade has put the industry under severe threat and needs to be “fixed” urgently by government before legislature related to tobacco becomes too weak to regulate.

This come after the Tobacco, Alcohol and Gambling Advisory, Advocacy and Action Group (TAG) announced their involvement in the protocols to eliminate illicit trade in tobacco products.

Although South Africa is one of the first countries to sign the Framework Convention on Tobacco Control (FCTC) protocol to eliminate illicit trade in tobacco products in 2013, the protocol has yet to be ratified by parliament.

TAG said they would make proposals to the health department and parliament and assist in “drafting strong regulations, which comply with the protocol, including a system of tracking and tracing”.

Although the first session of the protocol will take place in October at a conference in Geneva, Switzerland, TAG is hopeful that the ratification will be adopted by parliament by the next session.

Tobacco Institute of Southern Africa (Tisa) chairperson Francois van der Merwe said: “We believe the legal tobacco industry in South Africa is under severe threat due to the current high levels in illicit trade.

“Tisa strongly urges the South African government to fix illicit trade first, before introducing further controversial tobacco control legislation which is currently being proposed by the minister of health.

“If the illicit tobacco trade is not addressed decisively and as a matter of urgency, there may soon not be a legal tobacco industry left to regulate.”

One organisation said there were far greater issues to be dealt with. Fair-Trade Independent Tobacco Association (Fita) chairperson Sinenhlanhla Mnguni said: “It is our view that if one seeks to understand the fiscal risks to the economy, you shouldn’t restrict your views to excise taxes and illegal tobacco alone.

“One needs to look at the entire sector, across all tax types and along the value chain. This calls for a need to look at corporate income tax, STC, VAT, Paye, personal income tax, SDL, UIF, import duties and excise holistically.

“One then needs to look across the value chain, from the agricultural sector to the importers and manufacturing, to retail, wholesale and exports.

“Different unlawful and illegal practices manifest in different ways across this spectrum. It is only then that one will be able to determine the complete set of risks to the industry. There is much more to the industry than what meets the eye.”

The launch of a study of the illicit tobacco trade in South Africa will take place in Johannesburg today.

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