ActionSA notes with deep concern and disappointment the announcement by British American Tobacco South Africa (BATSA) that it will close its manufacturing plant in Heidelberg, Gauteng, ending local production by year-end.
This decision, which will result in the loss of 230 direct jobs and countless indirect ones, is a direct consequence of the government’s sustained failure to combat illicit tobacco trade and enforce its own tax and customs laws. According to BATSA, with an estimated 75% of the South African cigarette market now illicit, continued local manufacturing has become economically unviable.
ActionSA regards this outcome as a disgraceful indictment of government failure. As the only party that has consistently and proactively fought the cancer of illicit trade, ActionSA warns that the same trajectory is emerging in the legal alcohol industry, where one in five alcoholic drinks sold in South Africa is now estimated to be illicit.
ActionSA has long cautioned that excessive excise duties — commonly referred to as “sin taxes” — have fuelled illicit trade and rendered legitimate businesses uncompetitive. This is starkly evident in the cigarette market, where the cheapest legal pack of 20 cigarettes retails for approximately R35, while an illicit pack sells for around R5.
Given that the minimum collectible tax on a legal pack is R26.22 (R22.80 in excise duty and R3.42 in VAT), it is mathematically impossible for legal products to compete. A similar pattern is evident in the alcohol sector, where illicit alcohol is approximately 37% cheaper than legal alternatives, largely due to excise duty differentials.
Given the catastrophic consequences of this government’s policy choices, ActionSA challenges the GNU to make its position clear to all South Africans: does it support a tax and enforcement regime that attracts investment, drives growth, and protects jobs, or does it persist with a regime that actively feeds the illicit market?
As South Africa’s constructive opposition, ActionSA will continue to call for an immediate halt to excise duty increases and for SARS, SAPS, and the Border Management Authority to be properly funded and capacitated to dismantle the illicit economy that robs South Africans of jobs, revenue, and growth while entrenching criminal networks.
ActionSA Blames Government Failure to Curb Illicit Trade for BATSA Plant Closure
ActionSA notes with deep concern and disappointment the announcement by British American Tobacco South Africa (BATSA) that it will close its manufacturing plant in Heidelberg, Gauteng, ending local production by year-end.
This decision, which will result in the loss of 230 direct jobs and countless indirect ones, is a direct consequence of the government’s sustained failure to combat illicit tobacco trade and enforce its own tax and customs laws. According to BATSA, with an estimated 75% of the South African cigarette market now illicit, continued local manufacturing has become economically unviable.
ActionSA regards this outcome as a disgraceful indictment of government failure. As the only party that has consistently and proactively fought the cancer of illicit trade, ActionSA warns that the same trajectory is emerging in the legal alcohol industry, where one in five alcoholic drinks sold in South Africa is now estimated to be illicit.
ActionSA has long cautioned that excessive excise duties — commonly referred to as “sin taxes” — have fuelled illicit trade and rendered legitimate businesses uncompetitive. This is starkly evident in the cigarette market, where the cheapest legal pack of 20 cigarettes retails for approximately R35, while an illicit pack sells for around R5.
Given that the minimum collectible tax on a legal pack is R26.22 (R22.80 in excise duty and R3.42 in VAT), it is mathematically impossible for legal products to compete. A similar pattern is evident in the alcohol sector, where illicit alcohol is approximately 37% cheaper than legal alternatives, largely due to excise duty differentials.
Given the catastrophic consequences of this government’s policy choices, ActionSA challenges the GNU to make its position clear to all South Africans: does it support a tax and enforcement regime that attracts investment, drives growth, and protects jobs, or does it persist with a regime that actively feeds the illicit market?
As South Africa’s constructive opposition, ActionSA will continue to call for an immediate halt to excise duty increases and for SARS, SAPS, and the Border Management Authority to be properly funded and capacitated to dismantle the illicit economy that robs South Africans of jobs, revenue, and growth while entrenching criminal networks.