BUSINESS MAVERICK: SARS pencils in an extra R10bn in tobacco excise revenue after clamping down on illicit industry

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BUSINESS MAVERICK: SARS pencils in an extra R10bn in tobacco excise revenue after clamping down on illicit industry By Tim Cohen tim_cohen

Former tax commissioner Tom Moyane famously halted investigations into tax compliance of cigarette production, and then some local producers were equally famously seen in the company of former Health Minister, now Minister in the Presidency, Nkosazana Dlamini-Zuma. That is all changed now, and the result has been dramatic.

The sales of illicit cigarettes just went up and up, reaching an estimated 17 billion cigarettes a year. The biggest brand in SA is now no longer Peter Stuyvesant, but a previously little-known brand called RG, research group Ipsos discovered. The exercise has been so successful that Mlenzana said SARS had decided to revive the plan to upgrade tobacco tracking with what is known in the industry as a “track and trace” system. The system places cigarette counting machines in factories and relays that information in real time to SARS. It also stamps packets with an identification system.

Francois van der Merwe, chair of the Tobacco Institute of Southern Africa which represents the international brands, has welcomed the decision, saying that the tax shortfall it had previously conservatively estimated was R8-billion. For SARS to anticipate collecting R10bn was higher than even Tisa expected.We are extremely happy with SARS’ interventions and plans. It will result in a level playing field between producers and result in higher government income.

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