The Policy Fix: What South Africa Must Do to Curb Illicit Cigarettes
The illicit cigarette trade in South Africa has spiralled into a national crisis, with dire consequences for the economy, public health, and local businesses. As the trade grows, it has become increasingly clear that urgent and decisive action is needed. In this article, we will explore the crucial steps South Africa must take to tackle this issue, with insights from the South African Tobacco Transformation Alliance (SATTA), a leading voice in the fight against illegal tobacco.
Understanding the Scope of the Problem
South Africa’s illicit cigarette trade has grown substantially over the past few years. Estimates suggest that up to 70% of cigarettes sold in the country are illegal. This has led to a massive loss in tax revenue, costing the government approximately R28 billion annually. The situation has worsened since the COVID-19 tobacco sales ban, which saw the illicit market surge from 30% to 70%. This growth threatens not only the tobacco industry but the broader South African economy.
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The Economic Impact of Illicit Cigarettes
The loss of tax revenue from illicit cigarettes has significant implications. With an estimated R28 billion in taxes lost each year, South Africa is losing out on vital funds that could support public services. Additionally, the legal tobacco industry, which provides thousands of jobs, is suffering. Many farmers, manufacturers, and retailers have seen their businesses shrink or shut down completely due to competition from illegal products.
SATTA’s Position:
“We must act now to protect jobs and ensure that the tax base is not further eroded by illegal traders,” says SATTA spokesperson Francois van der Merwe. “Illicit cigarettes are a threat to both the economy and public health.”
How Illicit Cigarettes Affect Public Health
The public health impact of illicit cigarettes is another critical concern. These illegal products often lack quality control, leading to harmful substances being present in the cigarettes. They are typically manufactured without regard for health standards, increasing the risk of severe health consequences for smokers.
The Toll on Legal Tobacco Farmers
The growth of the illicit market has had a devastating effect on South African tobacco farmers. Legal tobacco farmers have seen a dramatic decline in sales, with the number of commercial tobacco farmers dropping by over 21% since 2019. This loss is attributed directly to the flood of illegal cigarettes, which are sold at lower prices, undermining the legitimate market.
What South Africa Must Do to Curb Illicit Cigarettes
1. Increase Law Enforcement Efforts
The first step in curbing the illicit cigarette trade is to ramp up law enforcement. SATTA has called for greater collaboration between government agencies and businesses to combat the illegal trade. This includes more inspections of spaza shops and small retail outlets, which account for more than 80% of cigarette sales.
2. Implement Traceability Measures
One of the key recommendations from SATTA is the implementation of traceability systems for tobacco products. The introduction of a track-and-trace system would help authorities monitor the production and distribution of tobacco products, making it harder for illicit cigarettes to enter the market undetected.
3. Strengthen Tax Collection Systems
To prevent revenue losses, SATTA advocates for a stronger and more efficient tax collection system. By closing loopholes in the current system, the government could ensure that illicit traders are caught and penalised for evading taxes.
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4. Enforce Stronger Penalties for Illicit Traders
SATTA suggests significantly increasing penalties for dealing in illicit cigarettes, along with boosting law enforcement efforts. Stronger deterrents are necessary to make illegal activities less attractive to potential offenders.
5. Public Education and Awareness Campaigns
Raising public awareness about the dangers of illicit cigarettes is another important step. SATTA’s recent “Buy Legal, Stay Legal” campaign has been instrumental in educating consumers on how to identify illicit cigarettes and the dangers of supporting this illegal market.
A Call to Action:
“By educating consumers and urging them to report illicit sales, we can create a groundswell of support for legal tobacco products,” says van der Merwe.
SATTA’s Role in Combating the Illicit Trade
As a prominent organisation representing legal players in the tobacco industry, SATTA plays a critical role in the fight against illicit cigarettes. The alliance leads policy discussions and engages lawmakers to advocate for stronger regulations and enforcement mechanisms.
The Way Forward: A National Priority
Tackling the illicit cigarette trade in South Africa requires a coordinated, multi-faceted approach. SATTA proposes declaring the issue a national priority and appointing an Anti-Illicit Trade Coordinator to oversee efforts. By working together, the government, business, and consumers can make significant strides in reducing the illegal tobacco market.
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South Africa must take immediate and comprehensive action to curb the illicit cigarette trade. By strengthening law enforcement, improving tax collection, and educating the public, the country can protect its economy and public health from the devastating effects of illegal tobacco. SATTA’s ongoing efforts highlight the importance of tackling this issue, not just for the tobacco industry, but for the future of South Africa’s economic stability and wellbeing.
For more information on how to report illicit tobacco sales or to learn more about SATTA’s work, visit their official website.
