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Fears mount SARS contract could hit legal cigarette industry

The Tobacco Institute of Southern Africa (Tisa) has warned SARS could award a multibillion-rand contract to a monopoly, which may fail to curb the R8 billion illegal cigarette trade.

SARS issued a request for proposals on April 26, with a June 20 deadline, for bidders to submit proposals for the appointment of a single service provider, to bring in a system for tracking cigarettes in South Africa. The implementation of the system would be done over a year but Tisa has said the EU and Ghana have been through four years of consultation and trials before achieving success. According to Tisa, SARS lost more than R8 billion last year because of cigarette volumes not being declared and want any new system to primarily focus on volume verification through digital technology at the point of manufacture.

Tisa said it supported track-and-trace systems, which address the most profitable aspect of the illicit trade. These are complex, hi-tech systems that must be able to plug into the existing, as well as future, technology used by SARS, retailers, wholesalers and manufacturers so data can be shared in real time,” said François van der Merwe chairperson. “Rolling out such a sophisticated, IT- intensive system requires enough time for preparation, consultation and testing and Tisa is concerned that the rushed process being followed by SARS has skipped these critical steps.

“It will impose excessive and impractical regulatory burdens on small retailers when the real problem lies with local manufacturers who are evading taxes. This will only encourage retailers to sell illegal products because they won’t be able to cover the compliance costs of receiving legal cigarettes.”

He said the system specified in the tender will only capture the legal cigarette market and could drive illegal trade up.

Source: www.iol.co.za
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