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Govt losing R7bn a year due to illegal tobacco traders - study

The study, which is the first of its kind, also shows that around 8,000 jobs are at risk from the sale of illicit cigarettes with tax-compliant companies at risk of closing.

FILE: Picture: Pixabay.com.

JOHANNESBURG - The Tobacco Institute of Southern Africa has commissioned independent research on the illicit tobacco industry and has found that the government is losing around R7 billion a year to illegal traders.

Global research company Ipsos has found the “non-organised” trade sells 79.7% of all cigarettes in South Africa.

The study, which is the first of its kind, also shows that around 8,000 jobs are at risk from the sale of illicit cigarettes with tax-compliant companies at risk of closing.

The Tobacco Institute’s Francois van der Merwe says this has been a problem for a long time, and they’re hoping to work with the South African Revenue Service to clamp down on the illegal trade of cigarettes.

“The government is losing at least R7 billion. We are bleeding to death and if something is not done, seriously, there’s going to be a lose-lose situation in this country. That’s why I’m willing to do this publicly.”

The Tobacco Institute of Southern Africa says the illicit cigarette industry is not only costing the country billions, but also impacts on jobs and investors.

Van der Merwe says investigations into the illicit trade need to be stepped up.

“The market is constant. Consumption is constant. Everybody recognises that. The legal industry is bleeding, so it must mean the illicit is growing at the expense of the taxpayers, tobacco farmers and companies investing in this country, and that’s not right.”

(Edited by Zamangwane Shange)