The Fair Trade Independent Tobacco Association (Fita) says it plans to continue with its court action against government as it waits for the country’s official level 2 lockdown regulations to be gazetted.
President Cyril Ramaphosa announced on Saturday (15 August) that the country will move to a level 2 lockdown from midnight on Monday (17 August). The president confirmed that this will include eased restrictions around the sale of tobacco products.
However, Fita chairperson Sinenhlanhla Mnguni told 702 that the association is ‘cautious’ about the decision, as the government had previously reneged on a similar announcement.
“We are not getting too excited just yet. We recall not too long ago a similar announcement being made by the president.
“Then not too long before the implementation of that, the regulations get published and we then realised that cigarettes and tobacco products would not, in fact, be sold during lockdown under level 4.”
Mnguni said that as the regulations are yet to be published, the association was still following the existing regulations.
“We welcome the announcement by the president and we hope that this time we will see similar steps being taken. We are still being cautious at this point and we will see what happens.”
He added that Fita will continue with its court case against the ban even if new regulations allow for the sale of tobacco products.
Mnguni said that this is because the country could still return to a higher lockdown level if it sees a surge in coronavirus cases around the reopening of the economy.
Cost of ban
The sale of tobacco products, including cigarettes, has been prohibited since the country first introduced a lockdown on 27 March.
The ban has been in place to protect the health of South Africans, according to submissions from the government, and cigarette producers have failed to convince the country’s courts that the sale of tobacco products is a necessity.
The prohibition on alcohol and cigarette sales has come at a hefty cost to South Africa’s fiscus, says SARS commissioner Edward Kieswetter.
Kieswetter said that the country was already facing a shortfall as a result of the nationwide coronavirus lockdown.
He said that employment taxes are down by R14.5 billion (around 9%), while corporate income tax is down R16 billion (28%).
Other notable figures include:
- Tax from alcohol was down by R7 billion;
- Tax from cigarettes was down by R3 billion;
- VAT was down R14.5 billion;
- Customs duty was down by R16.7 billion,
“If you then add the downstream taxes from those companies you will also add the loss in corporate income tax and employment taxes that gets you to a shortfall of R15 billion,” said Kieswetter.