Zimbabwe: Cigarettes Manufacturers Blamed for Turning a Blind Eye to Smuggling

South Africa's tax watchdog, Tax Justice SA (TJSA), has accused cigarettes manufacturers in their country of paying lip service to tax laws, following the surge in tobacco smuggling.

This follows the interception and seizure of smuggled cigarettes worth nearly R12 million around Limpopo Province in the past week alone.

In a statement yesterday, TJSA said illicit tobacco had flooded the South African market.

"The extent of their (cigarettes manufactures) scorn for authorities has been evident this weekend as officials seized Remington Gold (RG) cigarettes worth millions of rands which had been smuggled into the country.

"This comes just a day after Gold Leaf Tobacco (GLTC), the company that makes the brand, loudly claimed it was above reproach," said the tax watchdog.

The organisation said contraband of cigarettes worth R3 million was seized by the police at Beitbridge border post while being smuggled in a bus travelling from Zimbabwe on Friday.

It said a few days ago, South Africa's National Defence Force soldiers bust smugglers with another contraband worth R2 million in the Madimbo area which is adjacent to Tshikwalakwala some 140km east of the Beitbridge border post.

TJSA added that in the same week, the police intercepted a fuel tanker packed with R7 million worth of cigarettes near Musina town.

"These busts are massive but, sadly, they're just the tip of the iceberg," said TJSA founder Mr Yusuf Abramjee. "Shops across the country are full of these illicit cigarettes, which rob us of billions in desperately needed taxes.

"They expose the shameless dissembling of Gold Leaf, who claim they are victims of a smear campaign".

He said investigations by market researchers IPSOS revealed that 85 percent of GLTC-owned brands bought in the survey were sold below the minimum collectible tax (MCT) rate of R21,60 per pack.

Mr Abramjee said it had also been established that every single pack (99 percent) of Remington Gold purchased in the survey was below the MCT and that some were sold for as little as R10.

"GLTC brands are by no means the only offenders and nearly half of all stores nationwide now sell cigarettes below MCT," he added.

"More than 25 weeks have passed since we handed a dossier of evidence to SARS and SAPS exposing this brazen criminality.

"In that time, an estimated R5 billion tax has been stolen, yet not a single manufacturer has been arrested nor a factory closed. We need a full investigation into the whole industry."

Mr Abramjee said a minimum legal retail sales price of R22 per pack of (RG) which was recently endorsed by the GLTC to help officials' combat illicit trade was ludicrous.

"If due taxes are paid, that leaves just 40 cents to cover the costs of raw materials, production, distribution, and retail margins -- and still make a profit. That is not a sustainable business strategy -- it is a smokescreen for tax evasion," he said.

He added that some of the licensed manufacturers across South Africa were selling cigarettes at prices that clearly show that they must be dodging tax.

"How much longer can our struggling economy afford to be looted of millions on a daily basis? And how much evidence do SARS and SAPS need to take action against these companies?" lambasted Mr Abramjee.

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