Tobacco company, Philip Morris South Africa (PMSA) has welcomed Finance Minister Tito Mboweni’s March 2020 deadline for a major South African Revenue Services (Sars) study into the extent of illicit trade.
Illegal trade in cigarettes alone has cost South Africa over R40-billion in tax revenue since 2010, according to the Tobacco Institute of Southern Africa. Overall, South Africa reportedly loses R1-trillion a year, or 20% of gross domestic product, to the illicit economy, with proceeds generally used to fund drug smuggling, human trafficking and other serious crimes.
Mboweni's commitment for Sars to look into the scourge is a welcome move, Philip Morris managing director Marcelo Nico said.
"The findings of the Sars research into the illicit economy will help to strengthen cooperation between the state, private sector, and civil society. PMSA fully supports all efforts to combat illicit trade.”
The next important step was for South Africa to ratify the Protocol to Eliminate Illicit Trade in Tobacco Products, Nico noted, saying the country suffered from one of the highest rates of illicit tobacco trade globally.
"We look forward to government urgently submitting this international treaty to parliament to ratify. This will add further momentum to our joint efforts," Nico said.
Beyond lost tax revenue, illicit cigarettes also undermined South Africa’s public health agenda as products may not comply with regulatory requirements, he added.
“As a tobacco company, we are walking the talk by moving away from selling cigarettes, with smoke-free alternatives now constituting 60% of our commercial activity. Our ultimate vision is for a smoke-free South Africa and the world,” he said.
Philip Morris International has launched a $100-million (about R1.4-billion) global initiative to tackle illegal trade and related crimes such as corruption, money laundering and organized crime. To protect its operations from crime and ensure compliance with the law, it uses advanced track and trace technology, security features and world-leading supply chain controls.