The National Council Against Smoking says it wants tax on cigarettes increased by 70% to reduce tobacco consumption and increase tax revenue. The Council has proposed that Treasury increase the price of cigarettes to between R5 and R7 a box.
The Council’s Savera Kalideen says there are 44-thousand South Africans that die as a result of tobacco-related diseases each year and this number has not fallen over the past 10 years. The tobacco industry is resisting a draft Tobacco Bill which will see a significant clamp-down on advertising to promote tobacco products.
Kalideen says they have already started engaging with Treasury. She says cigarettes are now becoming more affordable because the tax increases have not been inflation- linked. The council believes there is a strong link between price increases in cigarettes and the reduction in tobacco consumption.
“For the smoker the price will go up by about five Rands which will make it more unaffordable than the tax increase that we had this year at R1,22 on a pack of cigarettes which doesn’t really convince anyone to change their behaviour.”
This year, the Department of Health released its draft Tobacco Bill for public comment. This proposes a significant clamp-down on the advertising of tobacco products. The council says they have made more than ten proposals on the bill. Kalideen says they know the industry will push back against harsher legislation against smoking.
“In terms of the proposed new legislation, there has been a big push back from the industry because they know this kind of legislation is very effective and has worked else where and will probably reduce consumption and will affect their profits, so they are never going to support anything either tax policy or change in legislation if its going to affect their bottom line. There will always be a conflict of interest between public health benefits of policy and business interest of making a profit.”
The Council also wants Treasury to clamp down harder on the illicit cigarette trade. Laura Rossouw is with the economics of tobacco control project, she says revenue lost through illicit cigarette trade is estimated at three billion rand. Rossouw says there has been an increase in illicit cigarette trade since 2015 as tax based cigarette consumption decreased.
“The illicit cigarette market undermines both the fiscal and heath agendas of tobacco taxation policy it takes away from the revenue government can collect and also takes away the possible health effects that we can have through increasing the real prices of cigarettes.”
SARS says the spike in the illicit cigarette trade has been due to many factors. One of these is lack of proper monitoring and enforcement. SARS says it is currently working on the re-establishment of dedicated units within the revenue service to reduce the illicit trade.
“We actually involve and administer the whole manufacturing system of tobacco products as well as imports and exports. So, on a daily basis, the SARS officials are actually involved licencing the different manufacturing facilities. The process of enforcement entails an number of issues, but we also have to look at issues such as counterfeit products,” says Ilze Enslin from SARS Legal Policy Unit.