Tax Justice South Africa has called for tougher laws and mandatory jail terms for illicit cigarette traffickers after a foreign national was sentenced to 13 years in prison in Limpopo.
Image: File: SAPS
Tax Justice South Africa (TJSA) has called for tougher penalties against illicit cigarette traders, saying a recent 13-year prison sentence handed to a Limpopo trafficker should become the benchmark for a nationwide crackdown on tax crime.
The organisation on Monday warned that South Africa is losing an estimated R100 billion annually to illicit trade, placing severe pressure on the economy and public finances.
TJSA leader Yusuf Abramjee said the country could no longer afford weak penalties for offenders involved in the illicit tobacco market.
Abramjee called for mandatory prison sentences of at least five years for major tax offenders involved in the illicit cigarette trade, lifetime bans preventing convicted criminals from operating businesses, and stronger powers for law enforcement agencies to seize luxury vehicles, homes and other proceeds linked to criminal activity.
He added that illicit cigarettes are the engine room of the illicit economy that loots the state of vital revenue, robs children of their future, and threatens the health and safety of our most vulnerable.
“If the government is serious about tackling illicit trade, illegal cigarettes must become the top enforcement priority. We need to stop treating these criminals as opportunists and start treating them as economic saboteurs,” Abramjee said.
The campaign follows the sentencing of 56-year-old Toni Nathaniel Gumbo, who received an effective 13-year prison sentence in the Polokwane Commercial Crimes Court after being convicted of possession of illicit cigarettes and contravening immigration laws.
Police intercepted Gumbo on the R516 near Tuinplaas after acting on intelligence regarding a white Ford Ranger transporting illicit cigarettes from Musina to Gauteng. Officers recovered 36 master cases of Remington Gold cigarettes concealed in boxes, with an estimated street value of R360,000.
Economists said the illicit cigarette trade has far-reaching economic consequences. Independent economist Ulrich Joubert pointed to the potential closure of a factory operated by British American Tobacco South Africa in Heidelberg as an example of the damage caused by illegal competition.
Abramjee said this case shows what can happen when enforcement agencies act decisively and the courts impose meaningful punishment.
“The current prosecution process and sentencing rules are discredited and fines are no deterrent when criminals hide fortunes offshore. South Africa must stop slapping tax crooks on the wrist. We need to lock them up before they bring this country to its knees.”
Ulrich Joubert, an independent economist, pointed to the potential closure of a factory operated by British American Tobacco South Africa in Heidelberg as an example of the damage caused by illegal competition.
“If a factory like British American Tobacco closes in Heidelberg, how many people lose their jobs and how many dependents then don't have an income? So it has a real major impact on Southern Africa’s economy,” he said.
Joubert added that prison sentences should be strict and not allow convicts to continue working for illicit cigarettes syndicates while incarcerated.
“So that's why the Minister of Correctional Services, Pieter Groenewald, said that they're not going to allow any cell phones within the jails from now onwards. So that is important. They have to put a person away for some time and really expose them to the negative environment of being in jail,” Joubert said.
Unisa economist Dr Eliphas Ndou said that illicit trade imposes undesirable costs on the South African economy. He said the accompanying tax evasion deprives the National Treasury of the tax revenue needed to fund public services and infrastructure projects.
“This includes undercutting the prices of products sold by legitimate businesses that pay tax to the government, and can even lead to their closure, raising unemployment and increasing the number of dependents on SASSA grants,” he said.
“In addition, the budget shortfalls that are always mentioned in the national budget could be easily reduced when Sars aggressively combats this illicit trade. A strong deterrence signal is needed to prevent the illicit trade from flourishing within the country.”
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