DURBAN – The recently launched Black Tobacco Farmers Association (BTFA) yesterday called on the government to keep excise taxes at their current level when Finance Minister Tito Mboweni tables his maiden Budget tomorrow.
BTFA said its call was inspired by the SA Revenue Service’s (Sars) incapacity to effectively tackle the illicit trade of cigarettes to protect farmers from the threat of job losses.
Top independent economists have found that revenue collections from taxes on cigarettes have declined sharply despite successive rate hikes.
Research house Ipsos reported in November last year that Sars was now losing at least R8billion annually due to illicit cigarettes. Econometrix found that income from tobacco excise declined by R1.94bn between 2015/16 and 2017/18.
Ntando Sibisi, BTFA chairperson, said illicit trade, as well as an impending threat to increase excise taxes, posed a risk to the entire tobacco value chain, especially emerging farmer programmes that have developed small-scale tobacco farmers.
“We want to add our voice and request that we would like to see Sars tackling the illicit trade of cigarettes more seriously before excise taxes are increased further,” Sibisi said.
“At this stage, more excise duties will cause the illicit economy to grow even more. Under the current economic conditions, an excise increase will force more consumers to go for cheaper non-tax paying cigarettes.”
Sibisi said illicit trade was partly caused by high excise taxes, and was killing any progress black farmers had made to create and maintain jobs.
Sibisi said the illicit cigarette trade placed more than 10000 jobs at risk and deprived South African taxpayers of R25million in lost taxes daily.
“We call on law enforcement agencies to clamp down on the illicit cigarette trade.”
– African News Agency (ANA)