Sars loses R119 billion in tax revenue due to illicit cigarette sales since 2002

Sars has lost R119 billion of tax revenue due to illicit cigarette sales between 2002 and 2022. The illicit cigarette market comprised 5% of the market in 2009 and peaked at 60% in 2021, before decreasing to 58% in 2022.

They concluded that the South African government lost a significant amount of revenue by not receiving excise and VAT from all cigarettes consumed in South Africa and warned this trend is likely to continue if government does not secure the supply chain from the point of production to the point of sale.Van Walbeek and Vellios say increasing excise taxes is the most effective tobacco control policy for reducing smoking prevalence.

“Using the large excise tax increases as a pretext, the multinationals increased the retail price of cigarettes since the early 1990s, thereby increasing their profit per cigarette. A large proportion of the new entrants’ cigarettes were sold at prices which did not even cover the excise tax, a practice that continues today.”They also point out that instability at Sars, that started around 2014, resulted in a reduced capacity to collect excise taxes from cigarettes.

They warn that the illicit market threatens the Control of Tobacco Products and Electronic Delivery Systems Bill. Although this bill is more than five years old, it has not yet been signed into law. It proposes to implement plain packaging, ban point-of-sale advertising and make all indoor public places 100% smoke-free.

They say Sars should secure the cigarette supply chain to monitor cigarettes from the point of production to the point of sale. The Protocol to Eliminate Illicit Trade in Tobacco Products provides guidelines for reducing illicit trade, but South Africa has not yet ratified the protocol that commits governments to take effective steps to reduce the illicit trade in tobacco products, such as allowing only licensed manufacturers to produce cigarettes and implementing a track-and-trace system.

South Africa Latest News, South Africa Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Massive headache for Kieswetter – R119 billion up in smokeA new study sheds light on the value of the country’s booming illicit market and how it costs the fiscus billions annually.
Source: BusinessTechSA - 🏆 24. / 61 Read more »

Influencer income: Yes, it's taxable - and dodging SARS can cost youOPINION | Influencer income: Yes, it's taxable - and dodging SARS can cost you
Source: News24 - 🏆 4. / 80 Read more »

Sars is not always rightAvailable remedies when objections are incorrectly invalidated.
Source: Moneyweb - 🏆 5. / 77 Read more »

Gold Leaf Tobacco: SARS claims billions from Sasfin in Rudland money laundering debacleSars alleges that at least R8.2-billion in untaxed funds, linked to Gold Leaf Tobacco, were unlawfully sneaked out of the country over the past decade.
Source: dailymaverick - 🏆 3. / 84 Read more »

Cooking the books: Celebrity chef who defrauded SARS of R5m awaits his fateCooking the books: Celebrity chef who defrauded SARS of R5m awaits his fate
Source: News24 - 🏆 4. / 80 Read more »

Sars Demands DJ Ganyani to Pay R4 Million in Outstanding TaxesThe South African Revenue Service (Sars) has issued a final demand to DJ Ganyani for the payment of R4 million in outstanding taxes. If he fails to comply, Sars will proceed with the sale of his personal assets to recover the debt.
Source: City_Press - 🏆 7. / 72 Read more »