Cigarette ban threatens to bankrupt companies

The ban on the sale of cigarettes is one of the most controversial regulations in place as part of South Africa’s COVID-19 lockdown.

It has been confirmed by President Cyril Ramaphosa and various ministers that this ban will not be lifted when the lockdown is lowered to level 3 on 1 June.

This has drawn criticism from many – particularly considering that the ban on alcohol sales is set to be lifted on 1 June.

Gold Leaf Tobacco told MyBroadband it has been actively been involved in having the ban lifted and has lobbied for cigarettes to be sold at all levels of the alert level schedule.

“The CEO of Gold Leaf Tobacco corporation made a confirmatory affidavit as part of FITA’s (Fair Trade Independent Tobacco Association) court papers in which it was mentioned that the company is making a substantial loss of around R800,000 a day,” said Gold Leaf Tobacco.

“If the ban persists there is a real likelihood that the company will go into liquidation.”

The company said it employs 350 staff – all of whom would face the possibility of losing their jobs if the company cannot stay afloat.

“The closure of this business has far-reaching consequences as there are many more businesses and individuals along the value chain who depend upon this company to earn their livelihood,” Gold Leaf Tobacco added.

Prohibition lacks merit

Gold Leaf Tobacco said that while it respects the need to protect the health of South Africans during the COVID-19 pandemic, it does not believe the prohibition of tobacco product sales is merited.

“Studies have shown that 90% of smokers have continued to smoke during the lockdown. These smokers have been forced to source their cigarettes on the black market, paying up to 500% more for their cigarettes in most instances,” the company said.

“This has increased the illicit market which poses a further threat to our company as well as other manufacturers’ continued existences.”

It also highlighted that SARS has lost about R3 billion in taxes due to the ban on tobacco sales.

“Should the illicit market continue to grow as it presently is, then even post-lockdown SARS will continue to lose and legal manufacturers will face yet another threat to their existence.”

Additionally, Gold Leaf Tobacco said South Africans may be forced to choose between basic necessities and purchasing illegal, overpriced cigarettes.

“Sadly, most smokers will elect to feed the habit over necessities. This is an unfair situation unnecessarily created by the powers that be.”

It also highlighted that the negative psychological impact of depriving smokers of cigarettes and forcing them to “go cold turkey” has been made clear by “highly-respected individuals in the field of psychology”.

“It is the contention of highly-respected political analysts as well as experts in the field of law that the ban is irrational, unreasonable and unlawful,” added Gold Leaf Tobacco.

“There are 11 million smokers who wish that their voices could be heard. They have been the ultimate losers in all of this.”

Taking the government to court

British American Tobacco South Africa (BATSA) has confirmed it will take the government’s decision to continue the ban on the sales of tobacco to court.

BATSA said it is being supported by Japan Tobacco International, as well as other groups and organisations that are involved in the tobacco value chain in South Africa.

“BATSA has made every effort to constructively engage with the government since the ban came into force, including making detailed submissions, along with other interested parties, to various ministers, as well as directly to the presidency,” the company said.

“To date, no formal response has been received from the government, and BATSA has also not been included in any of the government’s consultation processes so far.”

FITA said it will also serve papers to the government following receipt of official records detailing the reasons for the banning of the sale of cigarettes.

“We are now finalising our supplementary papers which will be served on the respondents by no later than 29 May 2020,” said FITA.

Now read: How lockdown alert levels are determined, and what will happen to hotspots

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Cigarette ban threatens to bankrupt companies