Excise tax hike slammed by Black Tobacco Farmers Association

21 February 2019 - 13:51 By Nomahlubi Jordaan
Black tobacco farmers have decried a hike in excise duty on cigarettes.
Black tobacco farmers have decried a hike in excise duty on cigarettes.

The Black Tobacco Farmers Association (BTFA) has criticised the increase in excise tax announced by finance minister Tito Mboweni, saying it will affect their livelihoods.

Mboweni announced new increases in sin taxes on Wednesday.

In addition to excise duty hikes on alcohol, he said that the price of a pack of 20 cigarettes would rise by R1,14 to R16,66 and would increase by about 64c to R7,80 on a typical cigar.

Fuel levies would increase by 29c per litre for petrol and 30c per litre for diesel.

"We feel that the decision to hike excise tax on cigarettes at a time when government is still failing to enforce the law against tax evading tobacco companies - who buy no tobacco leaf from local farmers - is a callous disregard for law abiding workers," the association said in a statement.

With the legal industry "rapidly losing share to illegal cigarettes", the BTFA warned that 10,000 jobs in the sector were "on the precipice".

"This decision makes a mockery of government policy to protect jobs and promote emerging farmers."

The association called on the South African Revenue Service (Sars) to intervene.

"Sars is the only hope we have of saving our jobs.  It is hugely disappointing that Treasury has offered no help at all but instead decided to make things easier for tax dodgers by increasing tax again on the legal industry. 

"The farmers believe the higher than normal excise hike will do nothing but put the legal tobacco sector on its knees"

The association said tobacco was a lucrative crop that created jobs.

"For every hectare in which tobacco is planted, six decent jobs are sustained as tobacco has proved to be more lucrative than other crops that are farmed," the association said.

"While big tobacco corporations like British American Tobacco South Africa pump millions into emerging farmer training programmes and procure 90% of all the tobacco leaf farmed locally, it has hinted at a possibility of reviewing its business operations locally given that its business continues to shrink rapidly due to the unconstrained boom in illegal cigarettes of the past few years."