Opinionista Tebele Luthuli 5 June 2020

Illicit trade in cigarettes and alcohol has thrived during lockdown

Government has under-estimated how much the banning of alcohol and cigarettes boosted illicit trade. With alcohol now back on sale, it would be good for the country if the ban on tobacco products was lifted as soon as possible.

Last week saw mounting excitement ahead of the ban on alcohol sales being lifted on Monday, the start of Level 3 of the risk-adjusted lockdown. The beginning of the week saw long queues outside bottle stores and other outlets that had been prevented from doing business since the end of March.

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The intention of the ban was to allow the health sector to prepare for an anticipated peak of Covid-19 cases in three months’ time. However, the sale of cigarettes remains banned – a move critics say has nothing to do with the pandemic and everything to do with a certain minister’s abhorrence of smoking.

We are one of only three countries – the others are India and Botswana – to have banned the sale of tobacco products at this time. In SA, there is growing pressure on the state to lift the ban, with questions being asked about the science that informed the decision.

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Companies such as British American Tobacco are within their rights to challenge the ban in court, as the government is equally within its rights to defend its decision. These are extraordinary times for both the country and the world.

The surprise ruling by the Pretoria High Court this week, which found that the overwhelming number of disaster regulations were unconstitutional and invalid, amplifies the complexity of this crisis. The court found that many of the regulations limited and encroached on rights that are guaranteed in the Bill of Rights contained in the Constitution.

Importantly, the issue of the ban on tobacco sales was excluded by the court because of pending legal action by cigarette manufacturers, which is due to be heard next week. The state is defending the ban on health issues related to Covid-19. But the court did say that the overwhelming number of regulations failed to show a connection to the objective of limiting or slowing the rate of infections.

From Business Against Crime SA’s perspective, it is not in our realm to pronounce on the legal or health arguments. Our greater concern is related to the increase in the illicit trade in cigarettes.

With the unbanning of alcohol sales spurring an even greater call for the unbanning of the sale of tobacco products, it calls into question how much longer this can go on. Medical research shows that the benefits of giving up smoking only reflect months later, so temporarily stopping now seems to be of little use.

Reports indicate that a carton of cigarettes on the black market in Johannesburg sells for anything from R750 to more than R1,000, while some black market dealers in Cape Town have been offered as much as R3,000 for a carton.

Aside from the fact that there is far too much human contact during these deals, it really negates the efforts of government, SARS, law enforcement and other groups who have been battling the illicit trade for years.

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Furthermore, another very serious consequence of the ban is the loss in excise tax – something South Africa can ill-afford with its already crippled fiscus. The fiscus will be stretched even further as the country introduces measures to stimulate an economy that is expected to contract severely this year, reporting its weakest growth since the Great Depression of the 1930s.

With the unbanning of alcohol sales spurring an even greater call for the unbanning of the sale of tobacco products, it calls into question how much longer this can go on. Medical research shows that the benefits of giving up smoking only reflect months later, so temporarily stopping now seems to be of little use.

The greater concern remains the illicit trade of cigarettes and its impact on the South African economy.

While we have previously commented on the illicit alcohol trade, it is not nearly as deeply entrenched as the illicit trade in tobacco products. We can argue that the initial tax has already been paid on the beverages being resold on the black market, but the black market sales call into question the notion of liquor licences. The resale of alcohol without the appropriate licences is prohibited, but this was already taking off during the earlier phases of the lockdown.

There is a far greater social aspect to all of this. Keeping South Africans safe during this time and in the coming months is crucial. There was concern about a run on liquor stores when they opened, and whether physical distancing would be observed. We implore South Africans to be safe, but more so, urge businesses to help ensure the safety of their customers at all times.

The ban on alcohol was always slightly less difficult to justify in terms of its relation to the pandemic. While excessive alcohol consumption can affect the body’s immunity, at its most basic level it diminishes logical reasoning which in turn impairs decision-making, so there is a concern of increased exposure to Covid-19 in gatherings where alcohol is available.

While alcohol can still be consumed at home, it should be noted that hospitals have reported a 60% reduction in alcohol-related cases since the ban was imposed.

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Does the unbanning of liquor sales mean our emergency rooms will be full again? Is this something our health system needs right now, with the pandemic’s peak still to come? How can we operate successfully, contribute economically, and still keep people reasonably safe? There are critical questions we need to ask as a responsible business community in the country.

While the government constantly revisits solutions to address the ever-changing needs of our country in crisis, business needs to take up the challenge of being economically effective, operationally above board and socially sound. BM/DM

Tebele Luthuli is MD of Business Against Crime SA.

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