NATIONAL NEWS - Government yesterday backtracked and retracted a tweet about the alcohol and cigarette ban after it was posted five hours earlier by the official government twitter account, @governmentZA. 

The first tweet, posted at noon, said that both bans would stay in place for the duration of lockdown.

The tweet caused immediate shock and outrage.

Then at 17:00 yesterday, @governmentZA tweeted: "This account posted a tweet earlier today which said that the ban on the sale of alcohol and cigarettes would remain in place throughout the lockdown period. This is incorrect. The sale of alcohol and tobacco products is prohibited under the current Level 3 regulations."

After the initial shock, the correction came as a relief, holding the promise that the bans may be lifted on 15 August when the current state of disaster comes to an end.

Sharing zol

The tweets came in the wake of yesterday's countrywide restaurant staff protests and a report by the UCT's Research Unit on the Economics of Excisable Products (Reep), that shows a huge increase of 430% in the number of people sharing cigarettes, and potentially exposing themselves to Covid-19. This means the ban that has now been enforced for four months, is achieving exactly the opposite that Dr Nkosazana Dlamini Zuma is claiming to achieve. 

Her well-known justification for the cigarette ban - "When people zol, then they share that zol..." - has been parodied by many singers online but the Reep report has now finally proven her right. Albeit to show that instead of kicking the habit, the “sharing of zol" due to inflated prices under lockdown is more prevalent than ever.

The report says 93% of SA’s approximately 11 million smokers are still buying cigarettes. This means that millions of illegal transactions are taking place across the country every day.

British American Tobacco SA (Batsa) welcomed the independent study by Reep and called for the immediate suspension of the cigarette ban. Batsa says the report proves that the market has been completely taken over by illicit cigarette suppliers at the expense of law-abiding and tax compliant manufacturers. "The fiscus continues to lose R35-million in taxes every single day. After 118 days of lockdown, the ban on tobacco products sales has now cost over R4-billion in excise taxes alone and substantial job losses.

‘Don’t increase excise’

Batsa warned that replacing the prohibition with excise increases as the report suggests, would compound the devastating damage of the last four months. A post-ban hike in excise tax will permanently hand the majority of the cigarette market to criminals who do not contribute to this country’s fiscus, Batsa said.

"At the moment the tobacco market in South Africa is being run and dominated by illicit suppliers who, quite obviously, are breaking the law and making billions of rand in illicit profits," said Batsa Head of External Affairs Johnny Moloto.

The company, which prior to lockdown, contributed and collected R13-billion in total taxes every year, called for significant new resources to be allocated to the South African Revenue Service (Sars) to ensure that the market can be taken back from criminals in the aftermath of the ban.

"These illicit suppliers are not, suddenly, going to become compliant and start obeying the law and paying taxes when the ban is eventually, lifted. They evaded taxes prior to the lockdown, they’ve made billions tax-free during the ban and they will evade taxes after the ban.

Moloto said Sars faces "a massive battle" to return meaningful tax collection to the country’s tobacco market after the ban. "It is uneconomic to retail a pack of cigarettes at less than R25, if taxes are being paid. Anything selling below that number should be considered suspicious and investigated."

Round-tripping denied

The UCT report suggests that there is significant round-tripping of cigarettes supposedly destined for the export market making their way back into South Africa.

"Batsa exports to Bat entities in 12 other countries and the volumes we are producing are consistent with export volumes before the lockdown. Batsa is working closely with Sars and have implemented Sars’s new processes and protocols for production and export," said Moloto.

He said Sars officials are stationed at the Batsa factory and control production volumes, auditing the export declarations, verifying the container loading and sealing the containers.

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