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Independent research on the illicit tobacco industry has found that the South African Revenue Services (Sars) is losing R 7 billion this year because of this crime.

The study by Global research company Ipsos reveals the “non-organised” trade sells 79.7% of all cigarettes in South Africa and that illicit traders could have made over R15bn in the last three years.

The report also shows how the market prospered between 2014 and 2017 after Sars ordered that investigations and the inspection of cigarette factories be stopped, during Tom Moyane's tenure.

Karima Brown spoke to Journalist at Daily Maverick’s investigative team Scorpio, Pauli Van Wyk, to understand the business and the impact it has had on Sars.

When we talk about illicit tobacco, we must also remember that things like smuggling and under declaring your manufacturing is all part of illicit tobacco. It is not only your small players, it is also the big players like Imperial, British American Tobacco that cut corners...

— Pauli Van Wyk, Journalist at Daily Maverick’s Investigative Team Scorpio

I have written a story about Cecil Morden who was a treasury official and testified before the Nugent Commission into Sars. He showed over a seven year trend how under Mr Moyane's tenure, the decline almost in excise duties in terms of tobacco, slowed down in the first three years of his tenure which was 2014/15 and then 2015/16 and from 2016/17 it sharply declined...

— Pauli Van Wyk, Journalist at Daily Maverick’s Investigative Team Scorpio

2017/21018 it again sharply declined. Over those two years, it regressed our capability to collect tax and it actually regressed with about 15%.

— Pauli Van Wyk, Journalist at Daily Maverick’s Investigative Team Scorpio

Click on the link below to listen to the full conversation...

Cover photograph: Pixabay