South African tax watchdog concerned with tobacco smuggling

Thupeyo Muleya-Beitbridge Bureau

South Africa’s tax watchdog, Tax-Justice SA, has called for border authorities between Zimbabwe and South Africa to double their efforts in fighting the smuggling of tobacco and related products between the two countries.

In a statement, the organisation’s founder, Mr Yusuf Abramjee said criminal syndicates are tightening their grip on South Africa’s cigarette trade and only drastic emergency action can halt the looting of billions of rand in vital state revenue.

He said there were syndicates running smuggling cartels costing the two countries in potential customs duty.

Mr Abramjee said the latest study by independent market research giant Ipsos showed that shops in South Africa were still being flooded with illicit cigarettes despite much-publicised actions by the South African Revenue Service (SARS).

“It’s clear that the criminal cigarette manufacturers are winning this battle with SARS and continue to pocket over R19 billion a year in stolen taxes,” he said.

“More than two years after the illegal tobacco sales ban enriched and empowered their sophisticated illicit networks, they’re proving impossible to remove.

“The masterminds are making billions, which they siphon into offshore havens, while ordinary, honest South Africans struggle to receive basic, essential services.”

Mr Abramjee said there was a need for emergency sanctions against the transnational organised crime groups to shut them down once and for all.

He said Ipsos found that illicit cigarettes are being sold in up to four out of five stores in hotspot provinces.

A pack of 20 cigarettes, he said can be bought for as little as R7, less than one third of the minimum taxes legally due on them.

“Chief offenders are brands owned by Zimbabwe-based tobacco giant Gold Leaf (GLTC). Brands belonging to Carnilinx and Best Tobacco, who are members of South Africa’s Fair Trade Independent Tobacco Association (FITA), also lead in this illegal price war,” said Mr Abramjee

“Although SARS has a court order to freeze Gold Leaf’s assets, their brands are still freely available at illegal prices all over the country.

“Authorities must follow the money to catch the kingpins who are getting breathtakingly rich from this economic sabotage. It’s a national emergency and only swift and drastic action can rescue us.”