The Tobacco Institute of Southern Africa (TISA) has commended Minister of Finance Pravin Gordhan for maintaining the 52% total tax incidence on tobacco products.
TISA CEO Francois van der Merwe said the organisation was aware that the minister was under pressure to find ways of increasing fiscal revenues.
“However‚ we appreciate Treasury’s recognition of the need to balance taxation levels against the threat posed by a growing illicit tobacco trade‚” he said.
Van der Merwe added that the legally compliant industry would contribute more than R12 billion to the fiscus this year which significantly enabled and supported the government to undertake its development projects.
The increases in tobacco product excise duties announced by the Minister of Finance on Wednesday are:
- Cigarettes: 82c New excise: R 13.24 per pack of 20 cigarettes (was R 12.42)
- Pipe Tobacco: 27c New excise: R 4.16 per 25 grams (was R 3.89)
- Cigarette tobacco (roll your own): 94c New excise: R 14.88 per 50 grams (was R 13.94)
- Cigars: R 4.32 New excise: R 69.28 per 23 grams (was R 64.96)
“Taxes on tobacco products remain an extremely valuable source of income for governments all over the world. Unfortunately‚ a rise in taxes and product price increases‚ as a result‚ creates greater demand for lower priced products‚ thus creating opportunity which benefit illegal operators and organised crime syndicates‚ as they do not pay taxes.
“Our Government has lost in excess of R25 billion in revenue since 2010 due to illicit tobacco operators failing to pay the taxes due on tobacco products‚” Van der Merwe said.
Illegal operators were able to sell tobacco products at very low prices in comparison to legal products‚ which in turn stimulated consumption‚ he said.
“The consequence is that not only does the Government lose this much-needed tax revenue‚ but it also hampers its ability to achieve its health objective of reducing consumption and deterring access by the youth. This is of great concern to TISA and its members who are actively engaging with the public and government to ensure that there is compliance with the Tobacco Products Control Act.
“The need for strong government and industry engagement and collaboration has never been as urgent as is currently the position to find a balance between the health agenda and the economic contribution by the sector.
“Even though the increase is in line with inflation‚ it still creates opportunities for illegal operators to profiteer more at the expense of government and the legal industry. It is of crucial importance that government implement stronger administrative controls over manufacturers to ensure volumes produced are verified and declared to government‚” Van der Merwe said.
“TISA remains committed to working constructively with all relevant Government agencies to combat the scourge of the illicit tobacco trade. We stand ready to share our expertise and knowledge of the tobacco sector‚ as well as the implementation of the World Health Organisation’s FCTC Protocol on Eliminating Illicit Trade in Tobacco Products. The Minister of Health signed the Protocol in January 2013 on behalf of South Africa‚ but it still needs to be ratified by Parliament‚” Van der Merwe added.
Gordhan praised for maintaining 52% total tax incidence on tobacco products
The Tobacco Institute of Southern Africa (TISA) has commended Minister of Finance Pravin Gordhan for maintaining the 52% total tax incidence on tobacco products.
TISA CEO Francois van der Merwe said the organisation was aware that the minister was under pressure to find ways of increasing fiscal revenues.
“However‚ we appreciate Treasury’s recognition of the need to balance taxation levels against the threat posed by a growing illicit tobacco trade‚” he said.
Van der Merwe added that the legally compliant industry would contribute more than R12 billion to the fiscus this year which significantly enabled and supported the government to undertake its development projects.
The increases in tobacco product excise duties announced by the Minister of Finance on Wednesday are:
- Cigarettes: 82c New excise: R 13.24 per pack of 20 cigarettes (was R 12.42)
- Pipe Tobacco: 27c New excise: R 4.16 per 25 grams (was R 3.89)
- Cigarette tobacco (roll your own): 94c New excise: R 14.88 per 50 grams (was R 13.94)
- Cigars: R 4.32 New excise: R 69.28 per 23 grams (was R 64.96)
“Taxes on tobacco products remain an extremely valuable source of income for governments all over the world. Unfortunately‚ a rise in taxes and product price increases‚ as a result‚ creates greater demand for lower priced products‚ thus creating opportunity which benefit illegal operators and organised crime syndicates‚ as they do not pay taxes.
“Our Government has lost in excess of R25 billion in revenue since 2010 due to illicit tobacco operators failing to pay the taxes due on tobacco products‚” Van der Merwe said.
Illegal operators were able to sell tobacco products at very low prices in comparison to legal products‚ which in turn stimulated consumption‚ he said.
“The consequence is that not only does the Government lose this much-needed tax revenue‚ but it also hampers its ability to achieve its health objective of reducing consumption and deterring access by the youth. This is of great concern to TISA and its members who are actively engaging with the public and government to ensure that there is compliance with the Tobacco Products Control Act.
“The need for strong government and industry engagement and collaboration has never been as urgent as is currently the position to find a balance between the health agenda and the economic contribution by the sector.
“Even though the increase is in line with inflation‚ it still creates opportunities for illegal operators to profiteer more at the expense of government and the legal industry. It is of crucial importance that government implement stronger administrative controls over manufacturers to ensure volumes produced are verified and declared to government‚” Van der Merwe said.
“TISA remains committed to working constructively with all relevant Government agencies to combat the scourge of the illicit tobacco trade. We stand ready to share our expertise and knowledge of the tobacco sector‚ as well as the implementation of the World Health Organisation’s FCTC Protocol on Eliminating Illicit Trade in Tobacco Products. The Minister of Health signed the Protocol in January 2013 on behalf of South Africa‚ but it still needs to be ratified by Parliament‚” Van der Merwe added.
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