A group of companies, including British American Tobacco (BAT), retailer Spar and the SA Spaza & Tuckshop Association, has written an open letter to President Cyril Ramaphosa and his cabinet, calling for the controversial ban on tobacco and vaping products to be lifted.
The letter states that the ban has resulted in the loss of R3.5bn in excise taxes and enriched “billionaire criminals in the illegal trade”, money that could have paid for hospitals, 5,000 ventilators and 23-million food parcels for the poor.
The letter, which coincides with 100 days of the ban, argues that “corrupt enterprises had thrived beyond their wildest dreams while honest, hardworking citizens have had their hopes crushed”.
The letter comes as provincial leaders in the country’s economic heartland Gauteng are reportedly asking the national coronavirus command council to return the province to a harsher lockdown measures for two weeks at a time.
The Sunday Times reported that the provincial government wants an “intermittent lockdown” introduced which would close economic activity — including barring people from going to work — for intervals of up to two weeks.
Lockdown restrictions — which moved to the less onerous level 3 on June 1 — have hit the economy hard and dramatically cut the government’s revenue collections, even as it is under huge pressure to increase spending to support the country.
In the recent supplementary budget, finance minister Tito Mboweni revealed that this year’s revenue shortfall is expected to exceed R300bn. The state’s budget deficit meanwhile will reach 15.7% as a percentage of GDP.
The toll taken on an already weak fiscus threatens to raise SA’s debt levels beyond sustainable levels and has forced the country to apply for financial assistance of about R95bn from international development finance institutions including the IMF.
SA’s tobacco ban — one of the only bans still in place worldwide — has been a much-criticised feature of SA’s Covid-19 lockdown and is the subject of two separate court battles.
Supporting the open letter, founder of Tax Justice SA Yusuf Abramjee said the lockdown tobacco ban “is destroying the livelihoods of honest workers, while criminals in the illicit trade get rich”.
“The ban has backfired badly. It has not stopped people smoking but instead has driven them to the black market where organised corrupt networks are making billions,” Abramjee said.
A court challenge to the ban, brought by BAT, was postponed to August by Western Cape judge president John Hlophe, in a move the firm called “a delay of justice”.
A separate case, brought by Fair Trade Independent Tobacco Association (Fita), was dismissed by the high court in Pretoria. The association intends to appeal against the ruling, saying it was riddled with legal and factual errors.
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