Soundbite by Wendy Alexander MP.
The DA is deeply concerned that British American Tobacco is closing its only manufacturing plant in South Africa – destroying hundreds of precious jobs in the community of Heidelberg.
This closure represents a devastating blow to workers and their families, and serves as a stark warning about the catastrophic impact of unchecked illicit trade on our economy.
The illicit cigarette market has grown to crisis proportions, by one estimate, the growing scourge of illicit cigarettes accounted for over half of the overall market in 2020.
The effects of this rampant growth are vast and devastating not only for Heidelberg, but across South Africa. Tens of billions in tax revenue are lost every single year while the syndicates and their enablers’ pockets are lined.
The illicit market is able to avoid paying taxes to the extent that the formal sector is paying more tax per unit sold (not including production cost or margin), than what the illicit sector charges in total.
Ipsos reports that often illegal cigarettes are sold for cheaper than the taxes due on a carton of legal cigarettes.
South Africa needs to be putting a stop to this. Without immediate, decisive action, more manufacturers will follow, taking precious employment opportunities with them.
South Africa cannot afford good jobs in places like Heidelberg to disappear across our borders into the control of cartels in neighbouring countries.
We urgently need SARS to do more to clamp down on combat illicit trade and for the National Treasury to increase their funding appropriately.