September 25 will see the global implementation of a United Nations-backed treaty designed to crack down on the illicit trading of tobacco products. Known as the Protocol to Eliminate Illicit Trade in Tobacco Products, it was developed in response to a growing illegal trade in tobacco products, often across borders. The head of Secretariat of the World Health Organisation Framework Convention on Tobacco Control (WHO-FCTC), Vera da Costa, said the package of measures had so far been agreed to by 45 countries (out of 181) as well as the European Union – and others were expected to do so over the coming months “If the global illicit trade was eliminated overnight, governments would see an immediate gain of at least $31 billion in revenue,” she said. Francois van der Merwe, the chairman of the Tobacco Institute of South Africa (Tisa), said that almost eight billion cigarettes would be sold illegally this year, which translated into a more than R7bn loss to the state fiscus He reiterated an earlier call to government by industry lobby body AgriSA to “urgently respond” to the shocking findings of the Tisa study into illicit tobacco trade that was released this month. “The study found that a significant percentage of cigarettes are sold illicitly – with no excise duty being paid – with a clear correlation to foreign-sourced tobacco. South African tobacco farmers risk being cut out of the value chain if this trend continues. “The implication of the findings extends beyond tobacco,” added Pietman Roos, head of corporate affairs at Agri SA. “If criminal organisations can earn billions each year through bypassing simple excise taxes, the next step is to infiltrate the value chains of other commodities. Illicit trade already hurts local tobacco farmers and the South African towns that are dependent on this labour-intensive crop. Imagine this happening across the country.” A British American Tobacco (BAT) spokesperson said that cigarettes were among the most commonly traded products on the black market due to high profit margins, relative ease of production and movement, and low detection rates and penalties. “We see it as vitally important that governments establish workable tax regimes and economic policies that do not create conditions that encourage illicit trade, with strong border controls and effective laws to fight the black market,” he said. Major-general Alfred Khana, head of serious commercial crime at the directorate priority crime investigation, said in Parliament recently that he believed tax evasion was at the heart of illicit tobacco trade.
Legitimate businesses are operating as a front for illicit trade from neighbouring countries. – Alfred Khana
