Illegal cigs light up crime

13 January 2014 - 02:03 By NASHIRA DAVIDS
Cigarettes. File photo.
Cigarettes. File photo.
Image: Gallo Images/Thinkstock

Big players in narcotics trafficking are shifting their focus to the illicit tobacco trade - causing the government to lose billions of rands in taxes every year.

About 30% of all cigarettes consumed in this country are the products of illicit dealing.

According to the Tobacco Industry of Southern Africa, illicit cigarettes are either manufactured locally and not declared to avoid taxation, or are smuggled in.

Since 2010, said the organisation's CEO, Francois van der Merwe, the government had lost more than R15-billion in taxes to illegal smokes.

SARS spokesman Adrian Lackay said cigarette smuggling had become very lucrative.

"We are seeing the migration of big role players in the narcotics trade to tobacco smuggling," said Lackay.

He said the profit margins are even higher than in drugs trafficking and the risks are lower.

Cigarettes are confiscated and those convicted must pay stiff penalties, but imprisonment is likely for dealing in narcotics.

SARS reported that, during the 2012-2013 financial year, 138million contraband cigarettes, valued at R63.4-million, were seized.

Van der Merwe said there had been an increase in the number of syndicates in the trade.

"If we let this industry grow we could very well end up with a country overrun by organised crime.

"We have to do all that we can, as a partnership between the private and public sectors, to rid the country and continent of the scourge," said Van der Merwe.

"Illicitly traded tobacco products not only fuel existing organised crime syndicates, but also become an entry point for new criminals because of the low-risk, high-profit nature of the crime."

In October, police made one of the biggest busts when 1.6million Pacific cigarettes were found hidden on a train in Zimbabwe.

Van der Merwe said smugglers were moving away from transporting large consignments. By reducing the quantity of cigarettes being moved, they minimised their losses when caught.

Local manufacturers, he said, indulge in "excise manipulation".

They declare some of their product and pay excise on that, but run a "night shift" that is not declared. This makes it possible to put products on the market more cheaply.

"The government must audit these manufacturers. The answer is simple - they need to be closed down because they are defrauding the government and eroding the volumes of the legal, taxpaying industry," said Van der Merwe.

The industry organisation trains about 1000 government officials annually.