Cigarette maker British American Tobacco on Thursday demanded the immediate lifting of a cigarette sales ban in South Africa, saying the continued lockdown measure had turned over the multi-billion-dollar business to corrupt actors to deal in the commodity.President Cyril Ramaphosa’s government, however, has turned down BAT’s demand, saying tobacco products and alcohol – which also remains banned during the lockdown – greatly contributed to the negative effects of Covid-19 patients as seen at the country’s healthcare system.
But BAT insisted that after 118 days of lockdown, “the ban on tobacco products sales has now cost over US$235 million in excise taxes alone and substantial job losses.”
According to the country’s biggest cigarette manufacturer, this translated to the government losing US$2 million in tax revenue daily.
BAT’s assertions were prompted by a University of the Western Cape Province report claiming that the ban had proved to be a bonanza for the black market, while delivering negligible public health benefits.
The report said that 93 percent of the country’s smokers were still able to purchase cigarettes – “meaning that millions of illegal transactions are taking place across the country every day.”
It added: “The market has been completely taken over by illicit cigarette suppliers at the expense of law-abiding and tax compliant manufacturers, like BAT, and the fiscus continues to lose US$2 million in taxes every single day.”
Whereas the authors of the varsity report called for government to replace the ban with a sizeable hike in taxes on tobacco products, BAT said this would simply play into the hands of the illicit cigarette traders.
“A post-ban hike in excise tax will ‘permanently’ hand the majority of the cigarette market to criminals who do not contribute to this country’s fiscus,” BAT said.