Tobacco group welcomes lifting of ban on cigarette sales, drops legal challenge

Image credit: Twitter/FITA

The Fair-trade Independent Tobacco Association (FITA) has welcomed President Cyril Ramaphosa’s announcement that cigarette sales will be permitted under level 4 of the lockdown that starts on 1 May.

In a statement on Friday, FITA chairperson Sinenhlanhla Mnguni the Association will also drop its legal challenge against the government’s current ban on cigarette sales.

He said, “We as an organisation are now of the view that there is no longer a need to proceed with the legal steps we had initiated against government.”

‘Not essential goods’

Trade and Industry Minister announced the ban on 27 March, saying cigarettes were not “essential” goods. Health Minister Dr Zweli Mkhize also said smoking was “not helpful” in the fight against COVID-19.

However, in an open letter to the government shortly afterwards, the Association argued that the ban had intensified the illicit trade in cigarettes and tobacco products.

This meant that the government was losing tax revenue and that jobs in the tobacco industry value chain were being threatened, it argued.

According to some estimates, the ban cost the government nearly R500m in cigarette excise duties in the first two weeks of lockdown.

Tax relief

While welcoming Ramaphosa’s announcement, Mnguni said, “This, together with the tax relief extended to cigarette manufacturers and other industries announced by [Finance] Minister Tito Mboweni yesterday, are steps in the right direction by government in mitigating the damaging effects of the lockdown period.

“These steps are in line with what FITA had proposed to government throughout the lockdown period in our attempts at engagement with them.”

The Association said it will continue engaging with the government on how measures to combat the virus are affecting the tobacco industry.

In a statement on Thursday, the National Treasury announced tax relief measures aimed at cushioning the tobacco industry, among others, from the pandemic’s economic impact.

“Due to the restrictions on the sale of tobacco products, payments due in May 2020 and June 2020 will be deferred by 90 days for excise compliant businesses to more closely align tax payments through the duty-at-source system with retail sales,” it said.

The lifting of the ban is part of the government’s “risk-adjusted approach” to a phased reopening of the economy while limiting the spread of the virus.

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