Cape Town – Tobacco farmers, manufacturers and other organisations in the tobacco sector have pleaded with the government to freeze proposed tax increased on tobacco products announced in the 2020 Budget, due to the impact on the sector of Covid-19 and the sharp increase in the sale of illegal products.
The South Africa Tobacco Transformation Alliance’s Ntando Sibisi told Parliament’s Standing Committee on Finance, which met to consider draft tax legislation yesterday, that an increase in excise taxes would lead to lower revenue to the government, as tobacco products would become less affordable, and would lead to an even bigger proliferation of illegal products that had mushroomed during the five-month sales ban imposed on the industry during the lockdown.
Sibisi said the proposed increase amounted to “punishing us twice”, and some tobacco farmers and processors would go out of business if the duties were increased.
He also said the proposals also flew in the face of the National Treasury’s own policy guidelines to limit excise to 40% of the price.
He said that better law enforcement against the illicit trade could result in addition tax revenue.
