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Tobacco company Phillip Morris South Africa has praised recent remarks by Finance Minister Tito Mboweni would direct the South African Revenue Service into the size and extent of the illicit economy.
SARS and companies in the formal tobacco industry, through associations like the Tobacco Institute of South Africa (TISA), have been working together to crack down on the trade of illicit cigarettes and tobacco products which do not have a tax imposed on them.
Last year TISA released research which found that creeping operational failures in the South African Revenue Service allowed an illicit cigarette brand to outsell its legit "competitors" in SA.
In a reply to a written question from Member of Parliament for the Democratic Alliance Dion George released on Monday, Mboweni told Parliament that the outcome of the comprehensive research will assist in determining the size of each illegal trading item.
"In the absence of SARS' own research findings, it is difficult to put a value to the illicit economy. The research studies, which commenced in November 2018, are expected to be completed by March 2020," said Mboweni.
In a statement, Philip Morris SA Managing Director, Marcelo Nico, said the research would go a long way in protecting compliance tobacco companies, their employees and the national fiscus from the spread of illicit products in South Africa.
"We welcome Minister Mboweni's commitment in Parliament. The findings of the SARS research into the illicit economy will help to strengthen cooperation between the state, private sector and civil society. PMSA fully supports all efforts to combat illicit trade," said Nico.
Nico urged government to ratify the Protocol to Eliminate Illicit Trade in Tobacco Products, an international treaty aimed at reining in and cutting down the illicit economy.
"Our country suffers from one of the highest rates of illicit tobacco trade globally. We look forward to government urgently submitting this international treaty to parliament to ratify. This will add further momentum to our joint efforts," Nico said.
According to Tisa, illicit cigarette trade cost South Africa as much as R40bn in tax revenue since 2010.
