100% tax increase on tobacco products will kill industry – SATTA

CAPE TOWN – The South Africa Tobacco Transformation Alliance (SATTA) on Wednesday said that a 100% increase in the tax on tobacco products would kill the industry.

Anti-tobacco groups have called for an increase in tobacco excise taxes ahead of Finance Minister Tito Mboweni’s mid-term budget review speech.

The Congress of South African Trade Unions (Cosatu) also come out to support this call.

SATTA said the industry was bleeding as a result of the COVID-19 lockdown, which saw a ban on the sale of all tobacco products for months.

Spokesperson Zachariah Motsumi said that the industry was trying to recover.

“We are not the only ones in the tobacco sector who have suffered. All the members of the sector’s value chain organisation, SATTA – who include the Black Tobacco Farmers Association, BAT South Africa, the Limpopo Tobacco Processors and Tobacco Producers Development – suffered tremendous losses because of their compliance with the law.

“The same impact was felt by our extended value-chain partners, small traders and spaza shop owners, of whom the vast majority are black,” Motsumi said in a statement.

Motsumi said before the lockdown, 127 emerging farmers were planting tobacco but in the wake of the hard lockdown, 17 had thrown in the towel.

“If drastic action is not taken soon, the more than 150 black tobacco farmers who are struggling to make a living in rural South Africa will soon go out of business. I’m in the tobacco industry myself and interact regularly with farmers and other processors.

“And it is no understatement to say that our lives have all been devastated by the economic consequences of the national pandemic, where the legal sale of cigarettes and other tobacco products was banned for almost five months,” he said.

He said job losses were looming, adding that over 290,000 people were dependent on the tobacco industry for their livelihood.

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