Police in the Northern Cape seized R7.8 million worth of illicit cigarettes. Picture: SAPS
The growth of sales of illicit goods is skyrocketing worldwide, and South Africa currently bears the brunt of this industry.
With an already struggling economy, the illicit goods and counterfeiting industry is hitting hard.
According to Tax Justice South Africa, South African revenue Services (Sars) lost more than “R20 billion in tax revenue last year due to the illegal tobacco trade”.
In October, the organisation released a statement. It said that the R20 billion could have been used to develop South Africa’s renewable energy sector further and could have paid “for solar systems to take 20 small towns annually off the Eskom grid”.
“Tobacco has been at the forefront for many years of South Africa’s rampant illicit economy,” Sars Customs and Excise chief Beyers Theron told the organisation.
According to the research, in SA, almost 15 million illegal cigarettes are smoked each day, and “three out of four informal retail shops sell illegal products”.
In November, the Europe, Middle East and Africa (EMEA) Security Conference and Exhibition took place in Dubai, in the United Arab Emirates, where stakeholders from around the world gathered to find solutions to combat the illicit trade on the black market.
A panel discussion delved into the problems facing South Africa in dealing with illicit trades, and possible solutions were highlighted.
Transnational Alliance to Combat Illicit Trade (TRACIT) said in its report that while South Africa may be one of the largest and most diversified economies in Africa and the only country represented in the G20 and BRICS economic groupings, it faces challenges from illicit trade on multiple fronts, including, but not limited to, alcohol, cigarettes, fishing, mining, counterfeit electronics, pharmaceuticals, food, and clothing apparel.
“The magnitude of the losses is staggering, draining revenue and resources from an economy that could usefully benefit from increasing investment in infrastructure and improving living conditions for citizens. For example, the South African Revenue Service (Sars) estimates that illicit trade costs the South African economy R100 billion annually.
In terms of lost tax revenues, Business Leadership South Africa (BLSA) estimates that the country loses around R250 million a day.
Furthermore, the Organisation for Economic Co-operation and Development (OECD) estimates that South Africa is losing $3.5 billion to $5 billion a year, or more than 1% of its GDP, to illicit financial flows,” part of the report read.
And while the nation continues to bleed at the seams due to the illicit trade, law enforcement agencies have yielded significant successes this year, as they seized millions of rands worth of illicit cigarettes.
The most recent successes include September, when police in Limpopo seized R9 million worth of illicit cigarettes.
In October, police in the Northern Cape seized illicit cigarettes and tobacco products with a street value of approximately R10 million.
In November, police in the Western Cape arrested two men after their truck carrying a cargo of illicit goods from Johannesburg to Cape Town was busted. In a joint operation, the truck was intercepted near the Joostenberg Weighbridge along the N1 highway in the direction of Cape Town.
After further investigations, the members discovered a large consignment of illicit cigarettes with an estimated street value of R22 million destined for a warehouse in Montagu Gardens.
robin.francke@inl.co.za
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