Ease up on tobacco tax, farmers plead with Mboweni

2019-02-18 19:19 - Khulekani Magubane, Fin24
New Finance Minister Tito Mboweni addresses staff
New Finance Minister Tito Mboweni addresses staff (National Treasury) ~ Supplied

The Black Tobacco Farmers Association has pleaded with Finance Minister Tito Mboweni not to announce an increase in taxes on cigarettes, saying jobs on tobacco farms depend on it.

Mboweni will table his first Budget speech in the National Assembly on Wednesday afternoon. Sin taxes on products including alcohol and tobacco have long been a target of the Budget to increase revenue collections.

Many business formations and economy think tanks have asked that Mboweni not increase corporate taxes, as companies are battling an under-performing economy.

Illicit trade first

The letter from the Black Tobacco Farmers Association said the illicit cigarette trade placed more than 10 000 jobs at risk and cost the fiscus R25m in lost taxes daily.

The letter said the current incapacity by the SA Revenue Service (SARS) to effectively tackle the illicit trade of cigarettes was an affront to all efforts aimed at protecting farms from a threat of job losses. 

"Illicit trade, as well as an impending threat to increase excise taxes yet again, poses a risk to the entire tobacco value chain, especially emerging farmer programmes that have developed small scale tobacco farmers and improved their livelihoods," the letter said.

Association chair Ntando Sibisi said more excise duties would do nothing but cause tobacco trade to grow even more.

"We just want to add our voice and request the Minister ahead of him tabling his budget that we would like to see a SARS that will take tackling the illicit trade of cigarettes more seriously before excise taxes are increased further," Sibisi said.

Sibisi said, under the current economic conditions, an excise increase would drive more consumers to go for cheaper non-tax paying cigarettes.

"Illicit trade is partly caused by high excise taxes and is killing any progress that we have made over the years to create jobs and maintain jobs that have uplifted our communities. The future of tobacco farming, which provides a sustainable income for thousands of families, rests upon whether our concerns are taken seriously," said Sibisi.

As demand for the sector is in rapid decline, the BTFA’s main objectives include protecting and prioritising the interests of Emerging Black Tobacco Farmers and ensuring their continued development and sustainability.