Tag: South Africa

Challenge to Cigarette Ban Dismissed

South Africa’s ban on tobacco sales has caused the black market for cigarettes to explode, according to industry sources (Photo: BAT)
The Pretoria High Court has dismissed a bid by the Fair Trade Independent Tobacco Association (Fita) to lift South Africa’s ban on cigarette sales during the country’s coronavirus lockdown.
South Africa banned the sale of tobacco in March and extended the measure even as it lifted its ban on alcohol sales on June 1.
In announcing the High Court ruling, Judge President Dunstan Mlambo referenced the country’s state of disaster.
He said disasters, by their nature, may result in unforeseen consequences, but governments have to implement measures to manage and contain them.
The court also rejected Fita’s argument that cigarettes ought to have been considered essential because they are addictive.
“The fact that a substance is addictive does not render it essential,” it stated. “We therefore find no basis on which to interpret the level 5 regulations as permitting the sale of tobacco products.”
Fita will reportedly appeal the judgment.
A separate challenge to the tobacco ban, brought by local market leader British American Tobacco (BAT), is scheduled to be heard in August.
Unlike the case mounted by Fita, BAT challenges the constitutionality of the ban.
In an affidavit, BAT South Africa executive Andre Joubert argues the government failed to make a convincing legal argument that the ban was legally necessary or to provide legitimate arguments to show smoking increased the chance of contracting Covid-19, or that smokers would be worse off than nonsmokers if they contracted the virus.
Citing the rapidly rising illegal trade in cigarettes, BAT is pleading to have the case heard earlier than August.
June 29, 2020
South Africa Ordered to Overhaul Lockdown

Image by jessica45 from Pixabay
A South African court has found some coronavirus lockdown regulations imposed by the government “unconstitutional and invalid,” reports the BBC.
The high court in the capital, Pretoria, ruled that the measures were not connected to slowing the rate of infection or limiting its spread. The judge described rules around funerals, informal workers and amount of exercise as “irrational.”
Judge Norman Davis argued it was wrong to allow people to travel to attend funerals but not to earn their livelihoods by street trading, as many South Africans do.
South Africa initially had some of the world’s most restrictive lockdown measures, including a ban on tobacco sales.
Some restrictions were recently lifted but the ban on tobacco sales remains in place despite earlier indications that it, too, might be eased.
British American Tobacco and The Federation of International Trade Associations have mounted a legal challenge to the restrictions.
It was unclear if Judge Davis’ ruling also covered tobacco. The government was given 14 days to overhaul the regulations.
June 6, 2020
South Africa Asks More Time to Defend Tobacco Ban

Blanks for Peter Stuyvesant cigarettes waiting to be transformed into cigarette packs at a South African tobacco packaging factory. Photo: Taco Tuinstra
South Africa’s government has requested more time to defend its cigarette ban in court.
State attorney Arista Wasserman has written the judge president of Gauteng to request that the initial hearing in the challenge against the ban brought by the Fair Trade Tobacco Association be postponed in light of the pressures facing the Ministry of Cooperative Governance and Traditional Affairs, including the coronavirus pandemic.
South Africa banned the sale of tobacco at the start of the nationwide lockdown in late March, citing health reasons. The ban was extended under level 4 and again under level 3 of the lockdown. The government has argued that smoking leads to more severe cases of Covid-19, and the ban is necessary to reduce strain on the country’s health system.
The Federation of International Trade Associations, whose members include Carnilinx and Gold Leaf Tobacco, petitioned the court in May to reauthorize the sale of tobacco products.
British American Tobacco South Africa (BATSA) last week lodged a separate legal challenge against the ban. According to BATSA, the ban has cost it between ZAR300 million ($17.64 million) and ZARR350 million in lost revenues per week. It estimates that about ZAR2.4 billion has been lost in tax revenue during the first eight weeks of lockdown.
June 4, 2020
BAT to Resume Legal Action Against South Africa’s Tobacco Ban

Photo: Sang Hyun Cho from Pixabay
British American Tobacco South Africa (BATSA) will resume legal action against the country’s government’s decision to extend the ban on tobacco sales during Level 3 of the nationwide lockdown, reports Polity.
“BATSA has made every effort to constructively engage with the government since the ban came into force, including making detailed submissions, along with other interested parties, to various ministers, as well as directly to the presidency,” the company said in a statement.
“To date, no formal response has been received from the government, and BATSA has also not been included in any of the government’s consultation processes so far.”
The Fair Trade Independent Tobacco Association has already taken the government to court to challenge the ban in a separate case.
Minister of Cooperative Governance and Traditional Affairs, Nkosazana Dlamini-Zuma, argued that, while Covid-19 is a relatively new disease, early studies support the view that using tobacco products increases not only the risk of catching the disease but also the risk of contracting a more serious form of the disease.
“This, in turn, increases strain on the public health system, by increasing the number of people who will need access to resources such as intensive care unit beds and ventilators,” she said.
BAT said the ban threatens the survival of South Africa’s legal tobacco sector, which employs thousands.
May 29, 2020
South Africa Tobacco Ban May Endure as Lockdown Eases

Photo: Taco Tuinstra
The imminent easing of lockdown rules in South Africa may bring no relief for smokers who’ve been dealing with a tobacco sales ban for almost two months, according to a Bloomberg report.
On May 24, President Cyril Ramaphosa announced a further relaxation of South Africa’s coronavirus lockdown from June 1, allowing most of the economy to return to full capacity.
However, Cooperative Governance and Traditional Affairs Minister Nkosazana Dlamini-Zuma, whose department plays a key role in determining the lockdown rules, argued in favor of extending the ban when restrictions are next relaxed, according to people who listened to a presentation she recently gave to lawmakers.
A medical doctor and former health minister, Dlamini-Zuma has defended her anti-smoking position, noting that sharing cigarettes could spread the virus.
“When people zol, they put saliva on the paper and then they share that zol,” Dlamini-Zuma said last month, using a local term for hand-rolled cigarettes that sometimes contain cannabis.
Even before the ban, South Africa had one of the biggest illicit cigarette markets, which costs the government about ZAR7 billion ($394 million) a year in lost tax revenue, according to a report published and funded by the Tobacco Institute.
About 90 percent of people who wanted to buy cigarettes during the lockdown were able to do so, albeit at inflated prices, an online survey of 16,000 people conducted by researchers from the University of Cape Town found.
May 26, 2020
Industry Threatens Lawsuit Over Tobacco Ban Extension

Photo: Taco Tuinstra
The tobacco industry is threatening legal action after South Africa reversed a decision to end its ban on the sale of tobacco products.
To prevent the spread of the coronavirus, the government earlier this year suspended sales of cigarettes. The ban was scheduled to end on May 1, but on Wednesday, the government suddenly reversed course after it received 2,000 requests to keep the measure in place.
Retailers had placed thousands of orders for cigarette and vapor products ahead of the anticipated lifting of the ban.
Smokers across the country fumed, with an online petition garnering close to half a million signatures by May 1.
British American Tobacco (BAT) South Africa complained that, unlike the ban’s supporters, the tobacco industry, retailers and tobacco consumers were not given an opportunity to comment on the proposed reinstatement of the ban.
“This was grossly unfair and unlawful,” said BAT, adding that the online petition of more than 400,000 in favor of lifting the ban dwarfed the 2,000 individual submissions.
Meanwhile, the Fair Trade Independent Tobacco Association said it was confident of overturning the ban, having decided to proceed with legal action after the government’s backtrack.
“We had a meeting with our legal team, and the decision was unanimous, and we will be proceeding with the legal steps,” said chairperson Sinenhlanhla Mnguni.
Shadrack Sibisi, chairperson of the South Africa Tobacco Transformation Alliance, which represents black emerging tobacco farmers, said the continued ban would impact more than 8,000 workers and 30,000 dependents.
“Our losses are huge. From March 27 until today, we have sold nothing,” he said. “We harvested in early January and were ready to go, but then lockdown happened. We have been sitting with boxes ready, and now with the recent rains we are going to have to redry and repackage. The tobacco still needs to be processed.”
Others applauded the government’s decision to continue the tobacco sales ban, saying that health considerations supersede commercial interests. “While the right of the individual is important, when we are facing a crisis that poses a danger to society, the rights of the collective to health must take precedence,” said Professor Pamela Naidoo of the Heart and Stroke Foundation.
May 4, 2020
Smokers, drinkers hit hard
South Africa’s Treasury plans to raise an extra R1 billion from increases in excise taxes on tobacco products and alcohol, according to a story in The Business Daily.
The Daily said that smokers were expected to provide the Treasury with an additional R400 million [presumably in the first year of higher taxes], while drinkers were expected to provide
an extra R600 million.
The excise duty on a pack of 20 cigarettes will rise by R1.14 to R16.66, and that on a typical cigar by about 64c to R7.80.
The Treasury’s plans fly in the face of an appeal made earlier in the week by the recently-launched Black Tobacco Farmers Association (BTFA), which warned that the entire tobacco value chain in South Africa was under threat from illicit traders; a threat that could increase if a proposal to increase excise taxes again were accepted.
According to a story in The Business Day, it was estimated that close to 50 percent of South Africa’s tobacco-products market was controlled by illicit players, making it one of the world’s biggest markets for illicit tobacco products.
The illegal trade in tobacco products was said to be costing the fiscus up to R9 billion a year in uncollected tax.
The BTFA called on the government to keep tobacco excise taxes at their current level to protect jobs on farms.
February 21, 2019
Under threat in South Africa
The entire tobacco value chain in South Africa is under threat from illicit traders; a threat that could increase if a proposal to increase excise taxes again is accepted, according to a story in The Business Day quoting the recently-launched Black Tobacco Farmers Association (BTFA).
The story said it was estimated that close to 50 percent of South Africa’s tobacco-products market was controlled by illicit players, making it one of the world’s biggest markets for illicit tobacco products.
The illegal trade in tobacco products was said to be costing the fiscus up to R9 billion a year in uncollected tax.
The BTFA yesterday called on the government to keep tobacco excise taxes at their current level to protect jobs on farms.
Last year, the Government increased excise duties by between six percent and 10 percent in a move that was expected to bring in an additional R1.33 billion in revenue in the 2018/19 financial year.
The BTFA chairperson Ntando Sibisi said that his organization was asking the Finance Minister to ensure that the South Africa Revenue Service tackled the illegal trade in cigarettes more seriously before excise taxes were increased further.
“At this stage more excise duties will do nothing but cause the illicit economy to grow even more,” said Sibisi. “Under the current economic conditions, an excise increase will force more consumers to go for cheaper, untaxed cigarettes.”
Sibisi said the illegal trade was partly caused by high excise taxes and was “killing any progress that we have made over the years to create jobs and maintain jobs that have uplifted our communities”.
“The illicit cigarette trade places more than 10,000 jobs at risk and deprives SA taxpayers of R25 million in lost taxes daily,” he said. “We call on law enforcement agencies to act and actually clamp down on illicit cigarette trade and hope that this will be reflected in the budget.
“The future of tobacco farming, which provides a sustainable income for thousands of families, rests upon whether our concerns are taken seriously.”
February 19, 2019
Threat to SA’s growers
South Africa is at risk of losing its tobacco-growing industry if British American Tobacco Southern Africa (Batsa) switches to buying tobacco from overseas, according to a story in the Business Day.
Batsa recently notified the country’s only tobacco processor, Rustenburg-based Limpopo Tobacco Processors (LTP), that it might have to consider buying foreign tobacco should the illicit tobacco industry gain further traction.
Christo van Staden, the MD of LTP, was quoted as saying that the move would put the existence of his company in doubt.
“With an estimated global over-production of tobacco leaf expected this year and declining markets, it will be impossible for LTP to find alternative markets for these huge volumes of tobacco,” Van Staden said.
According to the story, Batsa said it was considering the switch because of the deteriorating market conditions for the tax-paying portion of the industry.
In December 2018, research firm Ipsos said cigarettes selling for less than the tax of R17.85 per pack owed to the SA Revenue Service had grown market share by more than 25 percent, from 33 percent to 42 percent in three months.
It was not spelt out why Batsa would find it necessary to switch to buying tobacco from overseas if illicit tobacco products increased their share of the domestic market, but presumably it believes that it can buy tobacco cheaper from elsewhere.
Van Staden said his short-term request to the Government was not to impose any further increases in excise taxes on cigarettes in 2019, because that would simply make the non-tax-paying products even cheaper by comparison with legal products.
LTP buys and processes most of SA’s tobacco crop from about 100 commercial farmers and about 150 emerging farmers. The industry is said to employ 10,000 farm workers with 35,000 dependents.
January 21, 2019
Winking in the dark
Philip Morris International believes that South Africa’s proposed tobacco regulations will create an impediment to its plan to phase out its cigarettes in favor of less risky alternative products, according to a story by Nick Hedley at businesslive.co.za.
PMI has said that, ultimately, it wants to replace all its cigarettes with smoke-free alternative products such as electronic cigarettes and heat not burn tobacco products.
However, the company said if the proposed Control of Tobacco Products and Electronic Delivery Systems Bill went ahead in its current form, it would restrict the communication and marketing of all tobacco products, including e-cigarettes and products such as IQOS.
The bill includes also provisions that would require tobacco products to be sold in standardized packaging and that would ban point-of-sale advertising and displays.
Marcelo Nico, Philip Morris’s MD for Southern Africa, was quoted as saying that the bill’s provisions could mean that consumers never got to know about new-generation products such as IQOS, which produce “90 percent less of the dangerous components” produced by traditional, combustible cigarettes.
“What we encourage government to do, and it’s in the submissions we made on the draft bill, is to separate the combustion burning of tobacco versus smokeless products like IQOS – they should be treated differently because this is part of the solution.”
The seven-million smokers in SA “should be given an alternative”, Nico told Business Day, adding that “progressive governments” in other countries had focused their regulations on harm reduction rather than blanket bans.
November 28, 2018