illicit cigarettes south africa

One of these investigation units was the High-Risk Investigative Unit (HRIU), which, together with other specialized units within SARS, collectively pursued tax evaders and those practising other forms of tax abuse in the tobacco industry. Decisive action needs to be taken. In the survey, smokers were asked to describe their most recent purchase of cigarettes, specifically the packaging type (which could include single sticks), the number of items/packs purchased, and the total amount that they paid for the cigarettes. Image: SAPS . We applied price correction rules where obvious reporting errors where identified. The year 2010 marked a turning point for South Africa’s tobacco sector. There is a strong and consistent age gradient, with older smokers more likely to purchase cheap cigarettes. Available at: http://www.thepresidency.gov.za/. Cape Town: southern Africa labour and development research unit [implementer], vol 2018. Share. South Africa . It is the latest in a series of busts that have featured Remington Gold cigarettes, which are made in Zimbabwe by Gold Leaf, the tobacco giant which also manufactures several local brands including RG, Sahawi, Chicago, Voyager and Sharp at its Gauteng factory. Available at: https://web.archive.org/web/20171031064837/https://www.timeslive.co.za/sunday-times/opinion-and-analysis/2016-04-03-the-rogue-unit-narrative-was-a-great-disservice-to-public-interest-and-made-up-of-lies-and-distortions/. Since its relaunch in 2006, TISA’s main argument has been that the illicit market is substantial and growing (van Walbeek and Shai 2015). Crowd1 scam uses Eben Etzebeth, Duane Vermeulen…, Retire at 55 and live to 80; work till you’re…, Norma Mngoma, Malusi Gigaba’s wife, spills…, Financial stress, divorce, empty buy-to-lets: Why so…, © 2020 BizNews, Inc. | The Rational Perspective. The final report by the commission also highlighted the growth in the illicit trade of cigarettes as one of the consequences of the institutional meltdown at SARS (van Walbeek et al. PhD dissertation, van Walbeek C (2014) Measuring changes in the illicit cigarette market using government revenue data: the example of South Africa. https://doi.org/10.25828/fw3h-v708, Thursby JG, Thursby MC (2000) Interstate cigarette bootlegging: extent, revenue losses, and effects of Federal Intervention. Using wave 5 of the National Income Dynamics Study (conducted in 2017), this paper investigates the market for very low-priced cigarettes in South Africa, which, in all probability, are illicit. Anecdotal evidence from personal communications with employees in the tobacco industry suggests that cigarettes can be manufactured for as little as R2.50 a pack. Since the sum of the excise tax and VAT in 2017 amounted to R16.30 (1.22 USD) per pack, any cigarettes selling for R20 (1.50 USD) per pack or less are likely to be illicit, assuming reasonable production costs. Over the past 10 years, the South African tobacco market has become increasingly fragmented as new entrants have entered the market and have taken market share away from the multinationals. Others remain in supernumerary posts with their skills going to waste. British American Tobacco maintains its lead but loses share due to high prices The finding that a greater percentage of cigarettes sold in cartons and 30-cigarette packs are cheaper than other packaging types holds for all price thresholds. Tob Control 27:65–71, Lopez Gonzalez L, Malan M, Van Dyk J (2018) Show us the data: Bhekisisa responds to #BigTobacco. Individuals may not answer truthfully about whether they are smokers, or the number of cigarettes they smoke, because there may be stigmas associated with smoking, especially for specific demographic and cultural groups (Pérez-Stable et al. By this definition, approximately 30% of cigarettes consumed in South Africa in 2017 were illicit. In September 2014, then-president Jacob Zuma appointed a retired Commissioner of Correctional Services, Tom Moyane, as the new Commissioner of SARS. Available at: https://web.archive.org/web/20181122050837/https://www.fin24.com/Companies/Financial-Services/revived-sars-illicit-economy-unit-already-eyeing-58-cases-20181019. Since the sum of the excise tax and VAT in 2017 amounted to R16.30 (1.22 USD) per pack, any cigarettes selling for R20 (1.50 USD) per pack or less are likely to be illicit, assuming reasonable production costs. “They are now openly available  throughout the country, along with other brands on which due taxes are obviously not being paid. Thus, it is reasonable to assume that this individual incorrectly reported spending R0.50 in total, and actually spent R0.50 per stick. In 2018, the real excise tax increased by 3% and the value-added tax (VAT) rate increased from 14% to 15%. (1) is specified as a logit regression model, and we report the marginal effects. Illicit trade is widespread in South African townships: approximately one-third of the cigarettes in the sample were illicit. Sunday times. In the months following Moyane’s appointment, many key executives and experienced officials, including the head of the HRIU, were suspended (Judge Nugent 2018a, b). Businessman Owen George Keyser was sentenced on Wednesday for transporting 40 000 packets of illicit cigarettes and having them escorted illegally. The industry has traditionally been highly concentrated, with British American Tobacco (BAT) having a market share in excess of 90%, followed by other multinationals (primarily Philip Morris and Japan Tobacco) (van Walbeek 2005). 1990; Roth et al. TJSA founder Yusuf Abramjee says: “Illicit cigarettes have been flooding over our borders since criminals took complete control of the tobacco market during the lockdown sales ban. This campaign was triggered by an industry-funded survey which found that, in June 2018, 27% of cigarettes in South Africa were sold at a price below the excise tax and VAT amount (Ipsos 2018a, b). }_i=\frac{Tot{Exp}_i}{Num{ Items}_i}\\ {} if0.5\le \frac{Tot{Exp}_i}{Num{ Items}_i}\le 4\\ {}\&\kern0.5em Tot{Exp}_i\ge 12\end{array}} $$, $$ {\displaystyle \begin{array}{l}{\raisebox{1ex}{$\mathit{\Pr}$}\!\left/ \!\raisebox{-1ex}{$ Cig$}\right. The sample has been reduced as a result of data cleaning and the removal of price reporting errors. 403. I’m talking of excise duties. In 2018, SARS established an Illicit Economy Unit that focuses on tax enforcement relating to industries where illicit trade is a problem, including tobacco (Khumalo 2018). However, since 2004, the decrease in cigarette consumption and smoking prevalence has levelled off (Linegar and van Walbeek 2018). “Remington Gold was smuggled so successfully that five million of them were being sold every day. 1), the first substantial decrease in more than 25 years. Version 1.0.0 Pretoria: Department of Planning, monitoring, and evaluation [funding agency]. “SARS is losing R36-million ($2.1 million U.S.) per day in excise revenue since the lockdown started, which amounts to R1.5 billion a month,” Sibisi said, approximately $87 million. }_i=\frac{Tot{Exp}_i}{Num{ Items}_i},\\ {} if0.5\le \frac{Tot{Exp}_i}{Num{ Items}_i}\le 4\\ {}\&\kern0.5em Tot{Exp}_i\ge 5\end{array}} $$, $$ {\displaystyle \begin{array}{l}{\raisebox{1ex}{$\mathit{\Pr}$}\!\left/ \!\raisebox{-1ex}{$ Cig$}\right. Trends Organ Crim 23, 242–262 (2020). The ban has been controversial, attracting praise from public health groups and criticism from the tobacco industry and some members of … 403. Correspondence to Thus, the real tax on cigarettes increased by 4%. For example, if an individual reports spending a total of R0.50 for 5 single sticks (resulting in a per stick price of R0.10); this is likely a data error, since there is no record of a single stick selling for less than R0.50 in South Africa, whereas there is evidence of single cigarettes being sold for R0.50 by informal vendors. After 2010, the multinationals’ market power was threatened by small and medium-sized local cigarette producers. Over this period there were also significant increases in the excise tax on cigarettes. The SARS official and two accomplices face charges of corruption and defeating the course of justice over the seized truck and contraband, which was allegedly cleared to pass over the Beitbridge border crossing from Zimbabwe. BACKGROUND: We estimate the size of the illicit cigarette market in low socioeconomic areas in South Africa before and after a tax increase. Of the 25,075 adults successfully interviewed in NIDS wave 5, 4224 indicated that they smoked cigarettes (Table 1), representing almost 6.7 million of the 34.6 million South African adults. NB Publishers, Cape Town, Pechacek TF, Nayak P, Slovic P, Weaver SR, Huang J, Eriksen MP (2018) Reassessing the importance of ‘lost pleasure’associated with smoking cessation: implications for social welfare and policy. The South African Revenue Service (SARS) and the Tobacco Institute of Southern Africa (TISA) have destroyed illicit and counterfeit cigarettes, estimated to be worth R100-million if it were to be sold legally with all excise duties being paid to government.

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