The Money Show withBruce Whitfield

The Tobacco Institute of Southern Africa (Tisa) has released a report on the illegal cigarette trade that is flourishing across South Africa under the watchful eye of Sars.

Some prominent politicians are reportedly benefiting from payments made from the illegal cigarettes available in more than 100,000 shops across the country.

General Manager at JTI in South East and Central Africa, Andrew Neumann says Sars is in a way turning a blind eye in policing the tobacco manufactures in the country.

He says the law requires the manufactures to declare their total production and pay tax according to that.

Read: Smokers who pay R10 for a pack are smoking us all

Sars seems to be turning a blind eye to the illicit cigarette trade.

— Andrew Neumann, General Manager at JTI in South East and Central Africa

We've seen an increase in illicit tobacco over a couple of years under the leadership of the prior commissioner of Sars. This is widespread and very public.

— Andrew Neumann, General Manager at JTI in South East and Central Africa

Neumann says he is much more optimistic that things will change now that Tom Moyane has been suspended.

I think this is an opportunity to make some small changes in the tax structure in South Africa. One of which would be to implement the minimum selling price at the excise tax rate.

— Andrew Neumann, General Manager at JTI in South East and Central Africa

SARS is currently losing about R7 billion due to the trade and there isn't much the police can do when they walk into a shop and find the prices relatively too low. The law simply doesn't make provision for that, says Neumann.

If you sell at a price lower than required, really that's not illegal. This ties the hands of the police, it is up to Sars to go and audit the manufacturers.

— Andrew Neumann, General Manager at JTI in South East and Central Africa

To hear the rest of the interview with Andrew Neumann, listen below: