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Illegal cigarettes trade in SA increases dramatically – study

RG and Caesar, which currently go for around R10 per packet of 20, are selling more than legal brands.

Picture: AFP

JOHANNESBURG - The Tobacco Institute of Southern Africa says Gold Leaf Tobacco’s RG brand is now the biggest illegal cigarette brand in the country followed by Best Tobacco Company's brand, Caesar. Both dominate 80% of the market.

The two brands, which currently go for around R10 per packet of twenty, are selling more than legal brands.

Tobacco Institute of Southern Africa says government is now losing about R8 billion a year to illegal traders.

The institute said in a statement: “Their prices are 73% cheaper than the reference price in the legal market used by Treasury to determine excise duties, and 44% cheaper than minimum taxes owed on each pack.”

It added: “The trade in illegal cigarettes has increased dramatically, despite promises of a crackdown from the South African Revenue Service, according to the latest Tobacco Market Study from research house Ipsos.

“Cigarettes selling for less than the tax of R17.85 per pack owed to Sars have grown market share by over 25%, from 33% to 42% in the informal market, in just three months. According to a 2015 judgment, cigarettes that sell for below the minimum tax can be deemed as illicit.”