According to the study, the illicit cigarette market made up 5% of the cigarette market in the country in 2009. In 2022, it sat at 58%, a slight decrease from its peak of 60% in 2021. <\/p>\n\n\n
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<\/a>In material terms, it is estimated that the annual total market in 2002 was 27.6\u2009billion cigarette sticks consumed, rising to 33.7\u2009billion sticks in 2022.<\/p>\n\n\n\n
“The number of illicit sticks, defined as the gap between self-reported consumption and registered sales, was less than 5\u2009billion from 2002 to 2012, after which it increased rapidly, reaching 19.7\u2009billion sticks in 2021,” said Vellios and Walbeek. <\/p>\n\n\n
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<\/a>The total revenue lost between 2002 and 2022, expressed in 2022 prices, amounted to R118.8 billion; over 92% came after 2010.<\/p>\n\n\n\n
From 2002 to 2009, lost excise and VAT revenue accounted for less than R2 billion each year based on 2022 prices.<\/p>\n\n\n\n
However, this changed after 2010, with lost excise and VAT showing significant increases.<\/p>\n\n\n\n
From 2020, lost excise and VAT revenue exceeded R16 billion yearly, peaking at R17.9 billion in 2021. <\/p>\n\n\n\n
The total revenue lost between 2002 and 2022, expressed in 2022 prices, amounted to R118.8 billion (R98.3 billion excise tax and R20.5 billion VAT).<\/p>\n\n\n\n
Research indicates that illicit cigarette trade was ubiquitous during the COVID-19 cigarette sales ban, “and illicit trade has not decreased substantially since the ban was lifted in August 2020,” said the study. <\/p>\n\n\n\n
Going forward<\/strong><\/p>\n\n\n\n “In the context of a market with such a large illicit component, an increase in the excise tax becomes much less potent as a tobacco control tool,” they added.<\/p>\n\n\n\n It is argued that an increase in the excise tax would impact the price of legal cigarettes but leave the cost of illicit cigarettes unaffected – contributing to its further growth. <\/p>\n\n\n\n “In the past few years, South Africa\u2019s National Treasury has increased the excise tax by roughly the inflation rate [however they] may be waiting for the South African Revenue Service (SARS) to contain illicit trade, which, to date, SARS has not been able to do, despite some gains,” said the researchers.<\/p>\n\n\n\n Edward Kieswetter, the commissioner of the SARS, has said that \u201cthe country is battling the scourge of illicit cigarettes smuggled from a neighbouring country, intending not only to displace legitimate manufacturers but also to deprive fiscus of all taxes due.\u201d<\/p>\n\n\n\n Recently, the Gauteng High Court granted SARS a notable win in its efforts to combat the illicit tobacco trade, enabling them to place CCTV surveillance systems within licensed customs and excise warehouses managed by tobacco companies. <\/p>\n\n\n\n