The government is considering phasing out the ban on the sale of tobacco products under Covid-19 lockdown regulations, but this does not necessarily mean they will be for sale in the nearest supermarket any time soon.
Co-operative governance and traditional affairs minister Nkosazana Dlamini-Zuma, in court papers opposing an application brought by British American Tobacco SA (BATSA), said she is giving consideration to the ban being lifted in a phased manner, starting with sales of tobacco by farmers to local processors or local manufacturers to be used in tobacco products for local consumption.
For now, level 3 regulations only allow for local production and sales for the export market.
Despite this, the government is adamant that the public health risks associated with tobacco products during the Covid-19 pandemic outweigh the economic loss, which it claims is not as severe as tobacco companies say.
The government lodged its opposing papers in the court on Tuesday, against the application brought by BAT SA, the local division of the world’s second-largest cigarette producer, to have the ban on the sale of tobacco products overturned.
This is the second court application brought in a bid to have the ban lifted. The first application was brought by the Free Trade Independent Tobacco Association (Fita), a tobacco lobby group representing smaller cigarette manufacturers, in the high court in Pretoria.
The matter was heard in court last week and judgment has been reserved.
BAT, supported by Japan Tobacco International (JTI), as well as groups and organisations representing the tobacco value chain countrywide, has lodged its application in the high court in Cape Town. In its court papers the company details the devastating effect of the continued ban on its revenue, and on the national fiscus, which is losing out on billions of rand in excise duties due to the prohibition.
Dlamini-Zuma, in an affidavit to the court on behalf of herself and President Cyril Ramaphosa, defended the decision to ban the sale of tobacco products, backing her argument up with affidavits from various experts.
“In a situation of evolving scientific knowledge, and with infection numbers rising rapidly, a responsible government has to take a cautious approach,” she said.
“Prohibiting the sale of tobacco products during the lockdown serves to reduce these risks — not only in respect of smokers themselves, but also those who would otherwise be exposed to second-hand smoke under lockdown conditions. The healthcare system, which includes health workers, has to be protected and prevented from being overburdened and overwhelmed.”
The minister argued that the ban is temporary and will be lifted when deemed safe to do so.
‘Exaggerated and unreliable’
Dlamini-Zuma said she accepts that the ban on the sale covered the entire domestic value chain, from raw tobacco farming through to final tobacco products sold at retail level, and that it will cause economic harm to those along the value chain.
However, she said the adverse affects of the ban are mitigated, to some extent, by all local production activities, as well as sales of tobacco and products for the export market, being allowed.
Dlamini-Zuma also argued that the “harm” will be felt for the duration of the ban but will be reduced once it is lifted. She said the claim of the numbers of jobs at risk across the value chain and enforced business closures among retailers are “exaggerated and unreliable”.
“That said, the government is mindful of the economic harm and the potential for job losses, [and] is monitoring the situation closely and we will lift the ban as soon as that can safely be done [that is, without imperiling public health and our healthcare system],” she said.
The minister said she also accepts that the fiscus is losing VAT on tobacco products because of the ban as well as excise duties on the illicit tobacco products sold during the prohibition.
Dlamini-Zuma said, “To place the latter loss in its proper context, however, according to a study published in 2020 the annual economic loss caused by tobacco use is at least R42bn, whereas the value of cigarette excise taxes collected during the last financial year from locally manufactured cigarettes was only about R13.9bn [one third of the annual economic loss].”
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