2026 SA Budget Acknowledges Illicit Cigarette Trade

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Yesterday we had the annual South African budget with the Minister of Finance acknowledging the problem of the illicit cigarette trade that has plagued the country more so in the last 6 years. The Covid lockdowns started the rot inspired by the Zuma family who has one of Jacob Zuma's ex wives as Minister of Health. She was the one who instigated the ban on alcohol and cigarette sales manipulating the situation whilst her kids were running a black market business and were eventually caught. No charges were filed as these are a protected corrupt family.

In this years budget the excise duty on a packet of 20 cigarettes was increased by R0.77c which sees the total duty earned for one packet of cigarettes reaching R23.58. This is actually quite a significant increase even if it is still small because this raised ceiling creates more profit for the smugglers.

The Finance Minister mentioned the illicit trade was costing SA in the region of R30 billion per year with independent studies estimating the revenue losses closer to R100 billion. i would go further and say this figures is more likely R150 Billion with the total SA population living within the borders far higher than the national figures suggest.

South Africa has a high smoker rate with roughly 30% of the population lighting up each day. Having an extra 20 million undocumented people one would suggest that would equate to another 6 million smokers which if they each purchased one packet of cigarettes daily would be worth around R50 billion in excise revenue.

There is no doubting the illicit trade is out of control with reports suggesting 3 out of 4 cigarettes sold are smuggled. The data everyone is using is so out dated no one knows the real numbers which will always tell you those numbers are much higher.

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This week an army patrol on the Zimbabwe/SA border successfully seized a load of smuggled cigarettes and confiscated the vehicle. The borders are porous and knowing how much tax revenue is being lost daily which is estimated at R250 million - R300 million daily you would think it would be commonsense to increase border patrols. Having the army active on the border and not border officials who are known to be corrupt is heading in the right direction.

What is very unfair is raising taxes on the citizens knowing where the gains can be found through stopping criminal activity. The increase in excise duty raised on alcohol yesterday was expected to boost the tax collectors coffers by R640 million which is nothing compared to what is being lost weekly with the cigarette revenue.

The actions or lack of by the government is the big concern and either they are part of the problem being involved or know who is or are not sure how to fix this. The problem with a corrupt government is the answer is most likely a mix of all 3 because the problem is very fixable.

SA has the highest unemployment in the world and what better way than to grow your army by offering employment. Fixing the porous borders will stop the smuggling and instead of losing R250 million daily they would be recouping lost excise duties. This money could be reinvested creating jobs working on infrastructure that needs updating or replacing and is so simple to see yet they look lost and clueless.

Posted Using INLEO