The South Africa Tobacco Transformation Alliance proposed that the country adopt a “minimum price level” (MPL) for cigarettes, which would enable law enforcement agencies and consumers to recognize illegal cigarettes purely by how low their price was.
Zacharia Motsumi, spokesperson for the Alliance explained: "If Treasury adopts a [minimum] price point of R28 for all retail sales of cigarettes, any cigarettes sold below this price would clearly not be tax-compliant given the amount that needs to be paid in excise. As a result, law enforcement agencies can enforce immediately based on a strong legal foundation and consumers would get certainty about the legality of their purchase.”
Motsumi estimates that excise revenues for the current fiscal year will fall by 32%, while SAR13.7 billion [US$843 million] in excise revenue will be lost to the illicit market, as a result of the country’s lockdown and subsequent ban on tobacco. He also said that a minimum price strategy would need to be supported by a deterrent criminal penalty regime which includes heavy fines and jailtime for traders who break the law.
The Alliance alliance represents approximately 11,000 tobacco farmers, processors, and manufacturers across five growing provinces who are committed to supporting transformation in the industry.