Police to crack down on illicit tobacco trade costing Sars R7bn

Police Minister Bheki Cele said the country’s police would crack down on the trade of counterfeit cigarettes, as they knock off R7 billion from the country’s tax base and fund criminal activity in South Africa.

Cele, who was addressing the media at Tembisa Police Station on Thursday, said the illicit tobacco trade registered the highest sales of counterfeit goods and drained billions from the country’s tax base.

“I’m told that counterfeit cigarettes take R7 billion from the government’s tax base,” the minister said.

Cele further said proceeds from the illicit tobacco trade funded criminal activity within the country.

“It pays some criminals to commit crimes,” the minister said, adding the country’s police would pay close attention to the trade.

Cele said during a walkabout with national police commissioner Khehla Sitole that they discovered that some spaza shops sold counterfeit cigarettes at R10 a packet.

The minister explained that every packet of cigarette was taxed R17.50, meaning vendors who sold cigarette packets at R10 would have to account for the R7.50 shortfall.

“This means two things, it is a counterfeit good, and you do not pay tax,” Cele said.

The minister said the police would crack down on the trade of counterfeit goods, paying specific attention to the illicit tobacco trade, and that the police would meet with stakeholders to address the issue.

“We are going to put special focus, very special focus on dealing with the matter.”

The Tobacco Institute of Southern Africa (Tisa) recently called on the South African Revenue Services (Sars) to bring back custom officials to inspect cigarette manufacturing plants in South Africa, to curb industry tax evasion.

Tisa said Sars should urgently act and ban all cigarette sales below R17.82 a pack, a minimum amount taxed by Sars, as this would help regain the R7 billion loss to the revenue caused by tax evaders in the industry.

An Ipsos study on the illicit tobacco trade in South Africa released recently found that Gold Leaf Tobacco Company (GLTC), registered and licensed by Sars, accounted for 75% of the illicit cigarettes in the country. RG, a GLTC brand, is the second largest overall, sold for R10.50 a pack.

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