Illicit Cigarette Trade

Illicit trade in cigarettes globally

Cigarettes are one of the world’s biggest illegally traded consumer products.  This is due to the illegal industry’s high profit margins, because of the non-payment of taxes, relative ease of production and movement and low detection rates and penalties.  The World Health Organisation (WHO) estimates that approximately 600 billion counterfeit and contraband cigarettes are sold annually, accounting for more than 10% of global cigarette sales.

Impact of the illegal cigarette trade in South Africa

Impact on the South African economy

  • More than R40 billion in tax revenue was lost between 2010 and 2018, which could have been used to fund much-needed infrastructure and services in South Africa.
  • This conservative loss is purely based on excise and VAT and does not take into consideration any associated taxes payable, such as company or personal taxes that have also been evaded.

Illegal tobacco trade funds organised crime and impacts on community safety

  • Interpol has confirmed that proceeds of the illegal tobacco trade fund organised crime.
  • Organised crime syndicates are involved in the illegal cigarette trade.
  • Proceeds are used to fund drug smuggling, human trafficking and other serious crimes, blighting the safety of local communities in South Africa and supporting regional organised crime networks.

Undermines the government’s health agenda

  • Illegal cigarettes are cheap. This makes them more accessible to all, but especially to young people. This undermines the Department of Health’s objectives of reducing smoking overall, but especially amongst the youth.
  • The government’s health agenda is further compromised where products do not comply with regulatory requirements, for example, the products exceeding the maximum tar and nicotine levels and non-compliance with Reduced Ignition Propensity regulations.

TISA Position Paper on the Illicit Tobacco Trade in South Africa