Regional body annoyed by the tobacco levy

| Thursday March 6, 2014 17:05

TISA says the levy eradicates trader harmonisation and hampers the free flow of goods within the SACU community. The levy is also criticised for imposing a larger burden on importers than local manufacturers, which is in contravention of the SACU agreement.

TISA CEO, Francois van der Merwe in a statement said, “This extreme, one sided measure was introduced to reduce tobacco consumption in Botswana, but potentially creates the opposite effect, which is a great concern to us.”

Van De Merwe said as costs of compliance increase, tobacco products become more expensive. He highlighted that illegal operators seize the opportunity to make huge profits by avoiding the payment of the levies and other taxes imposed by government.

“The potential for Botswana becoming a tobacco smugglers paradise is created because illicit operators can sell their products at substantially lower prices than the legal products on which the levies and taxes are paid.”

TISA states that the playing field becomes uneven with government losing revenue and the legal tobacco industry losing market share. “Illicit trade already accounts for more than 30% in the SA market, which costs the SA revenue fiscus R5 billion per year.”

It further notes that this has a direct impact on the income received by Botswana in terms of the revenue sharing agreement.

Furthermore, TISA states that health objectives are not achieved as the environment is created for tobacco consumption to increase because of cheap products in the market, rather than decrease, “Everyone loses except the illicit operators.”

The organisation says it supports balanced regulation that is evidence-based, reasonable and workable. “We fully appreciate the responsibility governments have towards public health. We however fail to understand why there was no consultation by the Botswana government with affected parties prior to the introduction of this levy,” said Van De Merwe.

In 2012-13 the SACU quarterly newsletter  stated that the region agreed to implement a second customs operation focusing on tobacco and tobacco products, which will be implemented in line with the already planned World Customs Organisation (WCO) operations for the year.

“The region also undertook stakeholder analysis for the next operation with a view to enhance the cooperation and coordination with key stakeholder.”

SACU stated that issues emanating from the evaluation of the operation auto were agreed as lessons learnt which would inform and shape the next operation. “It was agreed that the Secretariat will develop an operational plan incorporating all preparatory work that has to take place,” it stated.