Undercover 'shoppers' buy cigarettes for R8, find hotspot provinces for illegal trade
Four out of 10 stores nationwide (43%) are selling illegal cigarettes, and in two provinces this increases to 75%.
Cigarettes are selling for as little as R8 per pack, which is a third of the minimum collectible tax (MCT), says British American Tobacco SA (Batsa), citing Ipsos research.
“SA’s rampant trade in tax-evading cigarettes has hit record highs as brazen manufacturers, smugglers and traders defy the efforts of law enforcement agencies to stem the tide,” the company said on Tuesday.
The data was released as the military said members of 4 Artillery Regiment confiscated illicit Remington cigarettes valued at about R245,639 this week.
“During this operation, soldiers saw a group of men crossing the SA/Zimbabwe border into SA,” the military said.
Ipsos researchers have found that at least two-thirds of stores in four hotspot provinces are selling cigarettes below the MCT level of R21.60. That number rises to three in four stores in Free State and the Western Cape.
“SA’s illicit cigarette trade — the biggest black market for cigarettes in the world — is officially out of control,” said Batsa general manager Johnny Moloto.
“Over a year since the disastrous lockdown sales ban, the illegal networks it enabled and enriched continue to dominate the retail sector. They are destroying legal jobs and livelihoods and depriving the Treasury of R19bn in cigarette excise for 2021 alone.”
Moloto said efforts by the SA Revenue Service, police and army to disrupt the cartels have merely scratched the surface.
In its fourth investigation of the year into the tobacco trade, Ipsos found in the past four months:
- the number of forecourts selling illegal cigarettes has almost trebled;
- the number of stores in Northern Cape selling illegal cigarettes (63%) has quadrupled;
- four hotspot provinces now have shops selling illegal cigarettes in two-thirds of their stores; and
- three in four stores in the Free State (76%) and the Western Cape (77%) sell illegal cigarettes.
The latest Ipsos fieldwork was carried out from October 8 to 15 and follows similar studies in March, February and June.
Using the “mystery shopper” model, the researchers bought the cheapest cigarettes in 4,486 stores nationwide.
The Remington Gold brand was the most prevalent and selling at below MCT in two-thirds (59%) of instances.
New brands, not purchased in the studies earlier this year and new to the cheapest prices purchase list, included Liberty (R18), Roxbury (R10 and R15), Chief (R10 to R18), Ecco Nano (R18) and GMB (R10).
Moloto said to stamp out illicit trade, Batsa is calling for the immediate introduction of a minimum retail sales price of R28 for a pack of 20 cigarettes and stricter controls of all manufacturers and borders. It would also like to see the adoption of a comprehensive track and trace system for the tobacco industry.