Smuggled cigarettes cost R12bn in taxes

2012-11-05 18:23

Johannesburg – South Africans will smoke 8-billion smuggled cigarettes‚ an increase of 500-million cigarettes from last year‚ costing the government R12bn in lost taxes this year‚ Tobacco Institute of Southern Africa (Tisa) CEO Francois van der Merwe says.

Opening the Tisa conference on the illicit cigarette trade‚ Van der Merwe said on Monday that smuggled cigarettes now accounted for about 30% of the total number smoked in the South African market.

“With 52% of the retail price of cigarettes being tax‚ it means South Africa has the highest tax rate in the Southern African Customs Union. Illicit products are always smuggled to the region with the highest tax rate‚ because that is the smugglers’ profit margin‚” he said.

South Africa is one of the few African countries to have limits on cigarette advertising and the government actively campaigns against smoking. New anti-tobacco laws will make it an offence to smoke within 15m of the entrance to a public building and there has been a strong push to ban smoking indoors altogether.

Health Minister Aaron Motsoaledi has been among the most active anti-smoking campaigners‚ saying cigarettes lead to the deaths of about 5-million people in the world every year.

An estimated 25% of the more than 50-million people who live in South Africa smoke despite these attempts to curb smoking.

However‚ Van van der Merwe said the Treasury has been quite sensible in containing the tax increases on cigarettes for the past five years.

“Despite strong lobbying from the anti-smoking lobby‚ they have contained tax increases because it would just lead to more smuggling‚” he said.

Van der Merwe said illicit cigarettes’ share of the South Africa market was well above the international norm of about 10% and this was due to many countries around it‚ such as Zimbabwe‚ being source countries‚ while Namibia‚ Mozambique and Swaziland were transit routes.

He said the tax levied on one container of cigarettes was R5m.

“Smugglers know that if they get caught smuggling cigarettes it is considered one of the softer crimes and so they do not get punished as if they are smuggling drugs‚” Van der Merwe said.

He said the main reason for the rise in cigarette smuggling was that the gangs were getting “greedy”.

  • ajgreis - 2012-11-05 18:26

    Because the Government does not Know how to take care of the borders.

      gerald.king.589 - 2012-11-05 19:16

      Difinitely. Had they known where to draw the line with tax there wouldnt be such problems in the first place.

      joemarshe.push - 2012-11-05 19:21

      I crossed Beit Bridge recently. What a poor excuse for a border post.

      greg.quinn.353 - 2012-11-05 19:55

      Doesn't matter, the government will waste those taxes anyway.

      gieljam.gomtor - 2012-11-05 19:58

      They know very well what to do , but wont spend a fraction of the losses on security to curtail it REASON its far easier to screw every sent out the honest tax paying citizens who are so well covered with tax laws and the like that they have no chance to get a break.

      rejeanne.nel.33 - 2012-11-05 20:01

      Zuma will hunt these criminals down and lock them away. R12Bil is just what he needs for Nkhandla 2 (home for his next 24 wives)

      belinda.ober - 2012-11-06 02:35

      So What Mr Proof.. I thought the idea was that everyone should STOP smoking... Then there will be zero tax revenue. So see it as a dry run of sorts... Thats the problem with herd animals... Anyway; Prohibition in the US of A blew up in the faces of the "wissie" men and women of that time. Instead of people STOP drinking.. It made crimals of ordinary citizens; corrupted 50% of the Police and put the MOB on the map. Seemingly forever. And now we want to try the failed recipe again... Ag Shame!

      frederik.vanas - 2012-11-06 06:56

      are the gangs they are referring to Zuma and Co?

  • ianon.ym - 2012-11-05 18:27

    That's at least R12bn in taxes the government cant steal.

      johan.wilsnach - 2012-11-05 18:44

      But we will have to repay for them to steal!!!

      rontheogre - 2012-11-05 19:07

      If my calculations are correct, they DO collect R24 Billion in taxes on ciggies and cry over R8 Billion missed. Are they going to encourage us to smoke if the legitimate taxes dry up if all stop smoking, however unlikely that might seem? No wonder nothing is done to curb the high rate of alcohol consumption. Then Zuma might have to settle for a RDP house instead on Nkandla.

  • kim.buren - 2012-11-05 18:29

    "Gangs are getting greedy" Hmmmm pot calling the kettle black

  • lhensby - 2012-11-05 18:36

    And what happens to the taxes we pay anyway, it either gets stolen by the ruling parties ministers or president showerhead wastes it on his homestead.

  • amokoatedi - 2012-11-05 18:36

    Light em up hey, Better that than the taxe goibg to zumas compound

  • stephen.fienberg - 2012-11-05 18:36

    Well what does SARS expect? Not being a smoker myself but the last time I was in Moz I noticed a carton of 12 boxes costing just a little over R60 as opposed to R250. Last time I was at the Beitbridge duty free shop, a carton of SA cigarettes cost R200 while a carton of Zim cigarettes cost R100. Smokers will smoke what's cheapest and the margins make the trade rather lucrative. Cigarettes are so easy to smuggle that our lazy border officials will never make a meaningful impact on the trade no matter how much they seize. What's R12bn when more than triple that is lost on corruption and frivolous expenditure. That's a fight which will make a meaningful impact on the economy.

  • Karel du Toit - 2012-11-05 18:37

    Greedy government with such high taxes are the root of the problem.

  • FinalJustice - 2012-11-05 18:38

    Makes absolutely no sense; 8-billion cigarettes equates to R12bil in taxes, meaning that each single cigarette carries a contribution of R1.50? I don't think so, sounds like another mysterious calculation from the Census 2011 statistical team ... 'Oops, we must have accidentally dropped another 0 somewhere along the way'

  • grant.chancellormaddison - 2012-11-05 18:40

    So there's less taxes to go to Zumas Mansion......What a shame.

      nico.vandermerwe.54 - 2012-11-05 20:09

      Naah.. He'll have to take it from the poor, now...

  • johan.wilsnach - 2012-11-05 18:43

    Greed unfortunately works both ways. The anc should know this better than anyone else. Here is the problem we will have to cough up somehow. Watch this space!!!!!

  • ptmakgato - 2012-11-05 18:44

    That's Zuma's next year spending

  • gert.swart.393 - 2012-11-05 18:45

    People must be educated to stop smoking. Visit whyquitdotcom. It saved my life!

      belinda.ober - 2012-11-06 02:48

      So what happened to freedom of choice Mr Smart? Every-one of us will die of SOMETHING you know. More of Obesity than smoking; my humble guess only. I admit I do NOT know if thats a fact. I however submit that it IS a calculated, consider guess.

  • Thilivhali Fitzgerald - 2012-11-05 18:45

    if u cant get any BEE tender i guess thats d next business in which u can also get hold of those millions

  • drummond.doig1 - 2012-11-05 18:49

    It doesn't cost the government in taxes. It costs the South African tax payer in lost revenue. Our tax money does not by default belong to the government and its time that they realise this. Also time that news reporters grasp this concept too, before they write drivel.

  • erik.prinsloo.1 - 2012-11-05 18:49

    If government think people are going to stop smoking by pushing up the price of cigarettes to ridiculous levels they should expect that people are going to find cheaper cigarettes. The Americans tried it in a different way - banning alcohol - Capone and friends smiled all the way! Educate people properly!

  • ivan.vandermerwe.10 - 2012-11-05 18:50

    So what, someone else stealing from the govt.

  • gregory.jurgens - 2012-11-05 18:52

    Government created this with the taxes on cigarettes. If going to charge people 500 times the manufacturing price , obviously the black market will thrive. I admit I am guilty of paying R 7 for a packet of smokes. Please accept my apologies for not helping build Nkandla.

      ian.fraser.98 - 2012-11-05 19:35


  • facts.peter - 2012-11-05 18:55

    No problem. Let the educated people of this country (black, coloured, indian or white just pay more taxes). Rather erect more E-toll points every 20 meters and that problem will be solved the ANC way. Start blaming your own educated comrades about apartheid, it is soon on the cards.

  • denny.cray - 2012-11-05 18:58

    Yep, no doubt TISA is just concerned about the government not getting "its" taxes. Sounds legit.

  • markus.esterhuyse - 2012-11-05 18:58

    Ha ha R12 bn up in smoke! You cry about this and JZ pulls R250 mil through his A! Limpopo stole how many billions and Ace and the Free State how many billions? What a joke! Pravin how could R250 mil slip by you without you raising an eyebrow? What did you say about eradicating corruption?you are spineless pile of jelly! Put that in your pipe and smoke it!

  • dgduif - 2012-11-05 19:05

    Seriously ... they want me to quit etc. etc. BUT then want to tell me what to smoke and whinge about their lost revenue - what a cheek!

  • jay.heyns.1 - 2012-11-05 19:15

    Tisa ... tsss. I contacted them 5 times in 12 months in 2011, invited them to have a look at the illegal trade in my (then) town with smokes smuggled in inside mattresses at night, sold at R8 a box. They came, they inspected us VAT registered shops, they passed by the Ethiopian and the Chinese shops. I sold my business to the Ethiopian. Tssss, Tisa.

      Rita Nel - 2013-03-06 08:03

      Ag shame Jay. I really cry my heart out for you.

  • Rooinek007 - 2012-11-05 19:16

    I dont smoke so I dont care :)

  • fhumulani - 2012-11-05 19:19

    1 for the smokers, 0 for Nkandlagate

  • niel.phillips.7 - 2012-11-05 19:21

    I suppose this is a a good thing, less money for Zuma and his gang to steal

  • vivian.harris.73 - 2012-11-05 19:23

    Good! Now they can't steal more. Wonder who has cheap petrol?

  • frank.desousa.10 - 2012-11-05 19:23

    Francois,I c u work out ur arithmetic like a v/d merwe. If gov is loosin 12bn taxes from 8bn cigerettes that equals R1,50 per smoke or R30 a pack,just on taxes. I sell legit smokes for R18 a pack WTF. Get ur facts right. Don't b like the gov,just feeding us nonsense

      FinalJustice - 2012-11-05 20:34

      'like a v.d.Merwe' ... Bwaaaahaaaahaaaa! You almost made me shait my brooks now dude.

  • kimard - 2012-11-05 19:24

    who cares - less tax money for zuma's luxury lifestyle

  • Theuns Jacobs - 2012-11-05 19:28

    i told them i had illegal cigarettes, 2 police men look after my house for a month!!

  • duncan.olds.9 - 2012-11-05 19:28

    Two simple questions from someone who does not even live there - is your taxation justified (sin taxes are a pot of crap) and why are the customs officials / department so inefficient in stamping out "smuggled" cigarettes?

  • Eterni80 - 2012-11-05 19:30

    ironic considering how the government is clamping down on smokers...

  • george.pito - 2012-11-05 19:31

    Yeh they taxed the hell out of it now the illegal process corrects it. As Karel said greedy government with all the laws and taxes now they loose more. Same with Rhino horn they appoint BEE which cannot manage so the clever criminals takes over. Like to see the comparison to tax and illegal ciggarettes. Can only imagine other figures on VAT and tax evasion. Sjabeens ??

  • louis.hager.12 - 2012-11-05 19:34

    So I guess Zuma doesn't get his Ferrero on his pillow tonight?

  • J.Stephen.Whiteley - 2012-11-05 19:35

    Try a pigeon tax.

  • Anthony C. Onwudiegwu - 2012-11-05 19:39

    Racists comment, what has J Z got to do with cost and activitis in our borders or the bearocrasy in the business of cigarett.\r\n\r\nThe reason behind the bruhaha arround the cry and Van Da Mower's cry is the fall in the sale of locally made cigarett which has been affected by the rise in demand for imported cigarett wich cost less and better quality that the locally made.\r\nLick your wounds you greedy hipocrits and do the righ thing.\r\n\r\nAs usual send your dogs to the boarder and markets to confiscate and bring them to you for free smolke, is that npot what U do? Even your whire police and costoms officials smoke Kings Gate and RG, so who is the market?

      kimard - 2012-11-06 13:19

      i'll explain it to you - zuma want the tax money to have a nice life while the rest are starving. hard to understand?? if so - look around you or wash the sleep out of your eyes. a lot of people don't romanticize criminal activity but in the case of tax evasion in africa - hmmm go for it.

  • robert.c.porter.1 - 2012-11-05 19:41

    Smokers don't support the building of zumas private residence..

  • markus.esterhuyse - 2012-11-05 19:48

    Ha ha R12 bn up in smoke! Why cry when JZ pulls R250mil through his A! Limpopo can't account for several billion! Ace and Free State several bn ! Mr Pravin how could you not have said a thing about JZ spending on his pres res? Pravin what did you say about being stern on coruption? Spineless jelly! What a blow to your budget! Where there is smoke there must be a cigarette!

  • fouriejn - 2012-11-05 19:48

    Where can you find these cheap cigarettes? Please educate.

  • fouriejn - 2012-11-05 19:48

    Where can you find these cheap cigarettes? Please educate.

  • toofaan.monsoon - 2012-11-05 20:02

    The older I get, the more confused I get. Government is encouraging everyone to stop smoking. If everyone stops, there will be no tax. So how exactly can they complain about lost tax revenue when they're promoting a course of action that leads to this in any case ? BTW, I remember Eskom once asking me to use less power, then they bumped up the price because I was not using enough just to make up the lost revenue. So if the brilliant people at the top use the same so called logic, legit ciggies prices gonna go thru the roof !!!

  • anil.harichandre - 2012-11-05 20:07

    More money for the government to waste on parties, tenders for wives, family and friends, while millions of those who voted for them don't have their basic needs being met. Like housing, water & electricity, education and health care, that's in a mess. More money for transnet, saa, etc

  • john.ntlatseng - 2012-11-05 20:10

    Wat's the use,,,,Goverment is whining about tax as if it uses tax money accordingly......I not saying Goverment ain't progressing but its progress is nightmare...

  • Suzanne Viljoen - 2012-11-05 20:11

    I would really like to know what percentage the gov. gets for alcohol that destroys many families?

  • fmcwatts - 2012-11-05 20:19

    So what? Smuggle in the cigarettes! Look at the amount Zuma is spending on he's house & lavish lifestyle. Also the MP's squandering huge lumps sums..We deserve cheap cigarettes.

  • douglas.reid.921 - 2012-11-05 20:26

    ANC don't like competition when it comes to stealing tax money.

  • Dawn Campbell Gibson - 2012-11-05 22:02

    R12bn the ANC cant pinch. I smoke 'illegal' cigarettes too.

  • mo.ebrahim - 2012-11-05 22:07

    I really do not see why such heavy taxes and laws are applied to cigarettes and not alcohol..yes smoking is bad for your health. But alcohol takes many more lives. What about the drunk drivers. Killing inocent ppl.every newspaper u open has liquor ads in them. They really should regard alcohol the same as smoking if not worse

  • Cameron - 2012-11-05 23:38

    Dont think it makes a difference...the tax money would have just gone into the ANCs pockets anyway

  • obadia.segwape - 2012-11-06 00:36

    eish government likes its hard earned tax money to build NKANDLA

  • brionyl.french - 2012-11-06 05:17

    boo hoo!!! maybe if they had a brain they could figure it out

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