After the Bell: Stubbing out tobacco — one tax at a time

I don’t know if you smoke or if you have ever smoked. But if you do, or did, I’m almost certain that you didn’t start after the age of 30.

In fact, I would go so far as to say I don’t think I know anyone who had their first cigarette, who first picked it up as a habit, after the age of around 22 or so.

I know many people who have smoked on and off for years. They seem to go through phases. And some people smoke socially (which is another way of saying after a few drinks), but they don’t smoke during the day.

I’ve been very lucky, it seems to have no attraction for me. Even when I was (much!) younger, it just didn’t do anything, while for some people it was clearly much more difficult to say no.

But, whether you smoke or not, the industry affects you, simply because of the huge amount of money that it gives to the fiscus through taxes.

In almost all countries, it is common now to charge excise taxes on tobacco, to basically make it as expensive as possible to smoke. 

Basically, the idea is to tax tobacco to death. Before it kills you.

It says something about the hold tobacco has over people that, in the thirty-odd years most countries have been doing this, no one has yet come up with a better way to stop people from smoking. 

But, as two academics who run the Economics of Excisable Products department at UCT reminded us in the Sunday Times over the weekend, the government is not getting all the money that it is due.

In a way, this is nothing new. The tobacco industry around the world is expert at getting around laws. 

It sells products it knows to be addictive, and the more it sells, the more money it makes. 

This is why it is lobbying against the new Tobacco Bill so hard – the tobacco industry knows it will harm their profits.

As Professor Corné van Walbeek and Samantha Filby explain, one of the main reasons for the jump in illicit tobacco is the hard lockdown during the Covid pandemic. At the time, it made no sense to ban the sale of all tobacco products.

It was obvious what would happen.

I wondered at the time whether the tobacco industry might have, counterintuitively, understood that the ban would help it in the longer term.

Certainly, on the evidence, it led to people moving away from established brands and smoking whatever they could. As Van Walbeek and Filby show, after the lockdown, people continued to smoke these cheaper brands, which don’t pay the taxes they should.

It says so much that Van Walbeek and Filby can explain that the illicit trade grew “when the former Sars (South African Revenue Service) commissioner, Tom Moyane, with the active support of British American Tobacco (BAT), weakened Sars from within”.

Essentially, this is two experts in the field, in a major publication, explaining that British American Tobacco was involved in a decision that weakened Sars and benefited BAT.

I’m sure it’s not Van Walbeek and Filby’s first brush with BAT, and they might well be keeping their powder dry in case BAT dares send them a lawyer’s letter.

While the tobacco ban during the lockdown never made any sense, we do know that the illicit tobacco industry has political friends.

Adriano Mazotti has been providing accommodation for Julius Malema’s family for years, while the image of him with former Cogta Minister Dr Nkosazana Dlamini Zuma and his social media commentary about her is still amazing to me.

I mean, and let me be clear, if someone like Mazotti were to publish pictures like that of me, someone else would be writing tomorrow’s After The Bell.

The only good news about all of this is that it does mean there must be plenty of money that we, as South Africans, are owed, but haven’t yet received.

I don’t know for sure, but I suspect that when current Sars Commissioner Edward Kieswetter made his promise to get a lot more money for the government, this is what he was thinking of.

He knows what needs to be done, and from what we can see, he is not afraid to do it.

I presume that whoever takes over from him will see it in exactly the same way.

There is one other thing to hope for.

Around the world, diseases related to smoking take so many people from us too early. 

If we get this tax system right and can get the government what it is due, maybe we can start to make progress.

Maybe we can tax tobacco to death.

And in the process, those who now smoke, some of whom I love, will be with us a lot longer. DM