Government must stub out illegal tobacco trade with track-and-trace tech, says JTI

SPONSORED | Japan Tobacco International reveals the full extent of the damage caused by illicit tobacco in SA — and calls for action

2021-12-06 06:30:00 PM

SPONSORED | For every pack of illicit tobacco sold in SA, the government loses revenue that could have made a difference to service delivery.

SPONSORED | Japan Tobacco International reveals the full extent of the damage caused by illicit tobacco in SA — and calls for action

15 November 2021 - 09:17Ahmad IsmailSponsoredCriminals continue to reap the benefits of the illicit tobacco trade in SA at the expense of legal businesses and consumers, says Ahmad Ismail of JTI.Image:123RF/DZIEWULThe illicit tobacco trade is an intricate problem. There’s more to it than meets the eye because it’s often linked to much larger criminal syndicates as well as corruption, tax evasion and money laundering.

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The illegal tobacco trade has become the third-largest “supplier” of tobacco in the world; the resulting loss of tax revenues around the globe is estimated to be $40bn (R599bn). This means that for every 1% that can be “taken back” from criminals, governments may effectively increase their revenue by $400m.

This loss of revenue has a domino effect, affecting the viability of otherwise law-abiding players in the tobacco industry. About the author: Ahmad Ismail is the Southern Africa cluster vice-president and general manager of Japan Tobacco International.

Image:Supplied/JTIIt’s become clear that the illicit tobacco trade is fuelled by affordability pressures on consumers, which is something that criminals continue to leverage.It’s essential that the public become aware of the concealed risks of cheap illegal tobacco products. Often it’s impossible to know if these comply with health regulations.

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The illicit tobacco trade being underregulated also harms small businesses and exposes underage children to cheap, backstreet tobacco products. Better enforcement and stiffer penalties are needed in this regard.Criminalsusedlockdown ‘loopholes’During the 2020 Covid-19 lockdown, when the legal sale and distribution of cigarettes were prohibited between risk-adjusted alert levels 3 to 5, SA experienced an

unprecedented increase in the illicit tobacco trade.The lockdown and tobacco ban were loopholes used by unlawful players to increase their distribution. Illicit tobacco is now estimated to account for 60% of the total market, dominating an informal sector that is unregulated by authorities.

While these suspect players were running to the bank, the legal industry, which pays its taxes, recorded a decline of almost 48%.According to market research group Ipsos, the loss of excise tax and VAT to the SA Revenue Service (Sars) from the legal tobacco industry was about R7.2bn in 2020. This is a conservative figure and excludes any losses due to the growth of the illicit tobacco trade.

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The loss of excise tax and VAT to the SA Revenue Service from the legal tobacco industry in 2020 was about R7.2bnMarket research group IpsosThe losses to the fiscus seem set to continue if the issues of high sin taxes and the illicit tobacco trade are not addressed, and this comes at a time when the government needs revenue more than ever.

The minimum collectable tax for a pack of 20 cigarettes is R20.01; this means 44% of the price of every pack sold goes straight to the government in the form of excise tax excluding VAT.For every illicit tobacco pack sold on the streets of SA, the government loses revenue that could have made a difference to service delivery. 

SA government must actGovernments take a leading role in the fight against the illicit tobacco trade. Without their support, industry efforts cannot be fully effective. Across the globe, Japan Tobacco International (JTI) is committed to complying with strict regulations and is working hard to implement solutions aimed at improving supply chain security.

Through co-ordinated efforts with the government, we can begin to reduce the problem.The SA government would benefit significantly from ratifying and localising the Protocol to Eliminate Illicit Trade in Tobacco Products under the WHO Framework Convention on Tobacco Control (FCTC), which came into force in 2018.

SA is a founding member of the FCTC; former health minister Dr Aaron Motsoaledi signed the protocol in Geneva in January 2013. It is concerning that, until today, the government has not ratified the protocol, which will allow for a globally aligned track-and-trace system which traces tobacco products from

manufacturer to point of sale. In 2020, Sars introduced a regulation for the installation of digital counters at local manufacturing sites. This was a step in the right direction, but the system still relies on the transparency of manufacturers to provide a report on their production levels, which inadvertently presents a loophole.

JTI believes a full digital volume verification system would be the most effective and affordable solution. This would provide the government with the manufacturing data needed tocurb under-declaration, which results in suspicious pricing and tax evasion.

Track-and-trace technology alone will not prevent illicit trading, but it will support law enforcement agencies and legitimate businesses in their efforts to reduce the problem.Consistent audits by Sars need to continue, the seizure of illegal tobacco products must intensify, and law enforcement agencies need to work in a co-ordinated manner to increase the prosecution and closure of underhand operators.

The illicit tobacco trade undermines the government’s objectives and negatively affects legitimate retailers, while the manufacturers of illegal tobacco continue to operate untouched and criminalise the retailers that stock their products.The licence to manufacture and trade tobacco comes with a sense of responsibility. Illegal players have shown that they do not appreciate this legal privilege, nor do they have any regard for the rule of law in SA.

This is a call to the government to act swiftly and stay true to its commitments to curb this pandemic in the tobacco industry before we have a 100% black market.The current trajectory is surely unsustainable and unaffordable for the country.

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Go speak to your mates in Parliament who are taking cuts Illicit cigarettes after being accused of State capture 🤣 Are we a joke to you? You mean Cyril and his tjommies are losing money to NDZ and her tjommies? Thats a good thing, no? No, it wouldn't make any difference to service delivery. They would just stolen more

That is capitalism speaking Who's running those illicit cigarettes? Those cigarettes they confiscate is not even a drop in the ocean. How do they pass borders that is why Factories are dead in South Africa its because of borders,fake clothes get into the country illegal and sold in our CBDS without being taxed and that money move out of the country illegal so that is why are we having such big unemployment.

Mxm🙄 Has corruption become another word for 'service delivery'?

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For every illegal foreigner in the country, the GovernmentZA loses tax revenue that could have made a difference to service delivery. They decided to ban cigarettes then people decided to smoke these cheap cigarettes when the ban was lifted people continued with the cheap the real ones are catching dust 🏌️

Because that Zuma women let it flourish when she banned it Who cares they dont worry about their people Welcome in 2020 Times Live It's nice in South Africa, corns are being corned and it looks like it's not nice to those who are used to corning others Bullshit, it loses out on kickbacks and campaign funding from these cigarette oligarchs.

Mxm kak praat jy What foolishness is this .. So what does corruption do. Cause VoetsekANC rotten to the core with corruption. And they helped the illicit trade of cigarettes with the start of lockdown. Then the sheep listen to the same people that lie and steal from the. And then u that report sh.t 🖕

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Which service delivery? Lol, let's be honest, Not a cent would have been spent on service delivery. Who actually still believes that? And theft The ANC government would steal that revenue same as they steal everything else so no difference whatsoever to service delivery! DlaminiZuma You think? Citizens clearly know better than the Govt that leads us into the depths of despair😡🙄

This is utter bullshit, what about the money our politicians are stealing right in front of our eyes. And then you put us on lockdown n not sell us cigarettes what do you think What's the meaning of 'Sponsored' in the beginning. Are news papers Influencers no now?

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😂 how mush service delivery, has happened with the money that has been accounted for? How many schools built? Hospitals built? Police stations built? Technological advancements? Post office streamlining? I’m trying to find out, where the monies went… 🤔 Glad you said could have made a difference to service delivery, if government and and it's ANC partners stop stealing and appointing unqualified personnel it will make a difference to service delivery. Thank auntie zol for the illicit tobacco trade

What services delivery are you talking about jwale ? What a joke 🤣 For service delivery…? Do you actually believe the sh1t you publish 🤦🏼‍♂️🤣🤣 Lets start with your looting of public funds first Why do I sense that the ANC government doesn't like it when they don't get what they are due, but turn a blind eye on not providing what they said they will? 🤔 Using service provision like they are providing it. High unlawfulness high influx of contrabands. FixtheLaw

Does government collect taxes from Chinese and Somalian businesses? Less taxes for them to steal, we should start doing everything illegal, liquor, fuel etc. mxm 500bill and you the anc complain about illigal tobacco ask DLAMINI Zuma she is the cause for this shit..... Which service delivery?

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What was the ban on legal cigarettes for then ? Headline is garbage! That’s not true. Money is misappropriated all the time. Whether their coffers are half full or overflowing, service delivery is never up to scratch. Oh, but I am sure certain people in the ANC government gets a backhander from these criminals. Remember the smoking ban......

Mmmmmhhhh now we know why the government hasn’t been able to provide services (80% of the time) over the years neh 🙄… Well then NDZ should be charged with treason Government is loosing nothing since they have no border control. Foreign owned shops pay no taxes in SA. There’s no service delivery anyway. What are you on about talking about loss revenue. Wake up or you’re in another planet. Illegal foreigners are the bosses and suppliers.

“Bullshit” WHAT SERVICE DELIVERY you mean into the back pocket of some government officials friends and families. Government is involved in illegal cigarettes? 'That could have made a difference in service delivery' what service delivery has this government ever implemented?

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No! That revenue would have been stolen by our politicians. Bullshit! That money does not go to any service department Our government isn’t interested in this. They could even be getting a cut. Give us a complete list of all the funds mismanaged throughout the years... that figure could have made a huge difference.. why can't they make it legal it.. because its much affordable to that group... preference...

Illicit has no tax and is very cheap. We like it Well they're not losing enough revenue then 'cause if they where! Our borders wl tightly monitored. But it's open for everyone going in en out' even stolen car cross over easily. Nope, they steal enough FOR THEMSELVES. If I smoked, I'd support them. 🤞 Smoking is bad. Ban smoking - I don't care about nicotine taxes.

I see no difference between legal and illegal causes of cancer and pollution. Let's stop stop smoking for a change 😂

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This is nothing compared to money lost looted through corruption. who cares they ban it whenever it suits them Government don't care... they increase tax on petrol to make up for losses on tobacco.. The cigarette ban was the best marketing for the illicit cigarette trade What about abo my friends spaza shops? Who doi pay tax at all

So much lies But the goverment is doing nothing with my friend spazas When we complained about the ban on selling cigarettes on baseless scientific grounds during the lockdown we were laughed at, I can tell you now for free that the bloodbath won't be stopped, smokers have warmed up to those cheap cigarettes.

And a senior politician grows his illicit wealth... There's no solution from ANC government, forget anything new, ANC must be voted out by 2024 they are traveling Africa to sign deals incase they loose power

You spelt looting wrong SPONSORED ? Like thos covid 19 stories? So the government is upset that someone else is looting the money? Government officials are in on this illegal cigarette. They know that these illegal cigarette is sold in millions monthly from these unregulated, illegal Spazas owned by Somalians, Ethopians and Pakistanis all over South Africa

To service delivery? Buullll 🙄revenue to do what? What have taxes done for the people since Ramaphosa took over office *That could have made a difference to bank accounts of government officials * i think this i what you meant Rubbish, it just go to a corrupt politician's pocket That's pure nonsense

There is a big tobacco company somewhere out there with employees running a production of this illicit tobacco, if our government wanted to close them down they would have long done that. The main priority of our government is vaccines and nothing else The what happened with the Covid Command Council Members who are implicated in the illicit trade?

Even spelling it out to them or using a picture book it still would not be understood, better remove those who came up with the decision to ban selling cigarettes. Or to some corrupt official/politician… Illicit tobacco traders are scamming the ANC scam Or lined the pockets of the corrupt - which is more likely?

Go ask DlaminiZuma and her puppet CyrilRamaphosa why we started with them in the first place. Let them pay the loss in income Bullshit You mean official government? Because the political cadre are the ones involved in illegal cigarettes… 👀

normalize reporting those who sell fake cigarettes so they steal more, cause rea tseba nto tse ke mahotswana SaaymanBarry Wrong. For every pack of illicit tobacco sold in SA, the government loses revenue that would have been looted or stolen by the ruling party. 😅😅 So why cant government block selling illicit cigarettes..... I need a job..... I can pin point for SARS revenue alot of places selling illicit cigarettes....duh 🙄🤔

HAAAAAIIIII the government caused this mess when you guys banned cigarets and now you want to cry foul? You made honest people have to resort to criminal activities for what? Lekker. Don't come and service delivery us. Go ask corporate gov where that R3Billion is? The very same government is letting in illegal cigarettes from various borders into our country through the help SAPS, home affairs workers etc

Not to service delivery...maybe to someones pocket So now it's the cigarettes fault. And why did NDZ encourage it? Law enforcement agencies are busy being politicized that why!

By service delivery you mean another Range Rover for them? 🙄🙄🙄 Whose manufacturing and selling it We've a government responsible for nothing What a joke 🚮😂😂😂😂😂😂😂😂😂😎 Kak man, the government just wants more money to steal.... Serves them right for banning tobacco!!! Lmao Service Delivery? All thanks to the idiot called Malema

The president CyrilRamaphosa is not concerned about this, he is only concerned with vaccinations, family meetings are held fast fast but issues concerning the country like crime, corruption are just vibes Why would they stop it. It’s one of the ANC’s family businesses..

Service delivery you say under this government ok Service what😡😡😡masepa service delivery. Futzek The 'Top Brass' need to read this a few times. They are the ones who know ALL about it. Come on now!!!! When you realize it’s the government behind the import and distribution of said illicit tobacco 🤯 They know how to stop all this mxm

So the selling of illicit tobacco is the cause of all our problems?😏. So we just gonna overlook the incompetence of Cyril and his cabinet? You can thank Dlamini-Zuma for that.