South Africa has become one of the world\u2019s biggest markets for illicit cigarette sales losing around R28 billion a year to tax evasion, according to a new report.<\/p>\n\n\n\n
While Africa\u2019s most industrialized economy has long struggled to prevent cigarettes being smuggled from neighboring countries, domestic manufacturers have also increased under-the-counter production, spurred by the country\u2019s pandemic-era cigarette ban.<\/p>\n\n\n\n
Research firm Ipsos, in a study commissioned by the South African unit of British American Tobacco Plc published on Tuesday, found nearly 80% of the country\u2019s retailers sell cigarettes below the minimum tax threshold. <\/p>\n\n\n\n
That\u2019s almost three times as many as seen in 2022, meaning foregone taxes in a cash-strapped country that can ill afford to lose that revenue.<\/p>\n\n\n\n
The bulk of such cigarettes are sold via convenience stores and vendors at prices below even the minimum R26.22 tax per packet charged by the South African Revenue Service, said BAT\u2019s head of regulatory affairs in the region Johnny Moloto.<\/p>\n\n\n\n
\u201cCurrently, about 18% of cigarettes are sold at around R10 for a packet of twenty in South Africa,\u201d he said in an interview on Tuesday in Johannesburg. <\/p>\n\n\n\n
\u201cSales of illicit cigarettes are a problem across the world, but South Africa is one of the worst affected markets.\u201d<\/p>\n\n\n\n
The illegal trade has been on the increase worldwide, although the majority of smokers are in lower and middle income countries that cannot afford the loss in tax revenue.<\/p>\n\n\n\n
It also poses health and security concerns, providing organized crime with opportunities for income and money- laundering. <\/p>\n\n\n\n
The World Health Organization estimates that\u00a0one in every ten cigarettes<\/a>\u00a0smoked globally is illicit, costing governments more than $40 billion a year in lost taxes.\u00a0<\/p>\n\n\n\n