Knowledge from the most recent Nationwide Revenue Dynamics Coronavirus Speedy Cell Survey (NIDS-CRAM) estimates that 85% of people who smoke continued smoking through the South African authorities’s controversial lockdown ban on the sale of cigarettes.
The survey, printed on Wednesday (17 February), reveals that solely 8% of South Africans give up smoking through the ban – and half of those that give up, indicated they began smoking once more when the ban was lifted.
The weighted NIDS-CRAM information reveals that there have been roughly 6.7 million grownup cigarette people who smoke (aged 18+) in South Africa earlier than the beginning of the lockdown.
Of the survey respondents, 8% indicated that they give up through the gross sales ban interval (~536,000 individuals), 85% indicated that they continued smoking and seven.5% refused to reply whether or not they continued smoking or give up.
About half the individuals who give up throughout lockdown (4% of the weighted pattern or ~268,000) indicated that they began smoking once more after the gross sales ban was lifted.
The survey additionally reveals that individuals who continued smoking, or began smoking once more after the ban, ended up smoking much more than earlier than.
The common variety of cigarettes smoked decreased from 7.9 in 2017 to six.5 through the gross sales ban, however went as much as 8.8 after the ban.
Tobacco firms and commerce teams have lengthy argued that the purported objectives of the ban – to encourage individuals to give up smoking – wouldn’t have that consequence, and would as a substitute push people who smoke to the illicit market, and result in value gouging.
The NIDS-CRAM survey reveals that this ended up being the case.
Exterior value information, adjusted for inflation and expressed in fixed November 2020 costs, confirmed that the typical value of cigarettes elevated by practically 200% between 2017 and its highest level through the gross sales ban, with substantial geographical variation in these costs.
Nevertheless, all gamers within the tobacco business weren’t affected equally by the ban, with native firms capable of enhance their market share on the expense of multinationals.
The NIDS-CRAM survey requested respondents what model of cigarettes they purchased throughout and after the gross sales ban.
These outcomes present that the market share of the multinationals decreased to 33% through the gross sales ban and elevated to simply greater than 50% after the gross sales ban.
“The tobacco market was tremendously disrupted by the tobacco gross sales ban through the lockdown. Persevering with people who smoke had been compelled to purchase cigarettes at tremendously inflated costs, and many individuals had been compelled to change manufacturers,” the researchers mentioned.
“The market construction modified dramatically through the gross sales ban interval and, despite the fact that there was a partial reversal of the market after the ban was lifted, the market shares are considerably completely different than earlier than the gross sales ban.”
Tobacco gross sales had been prohibited between 25 March and 17 August 2020 as a part of the federal government’s response to the Covid-19 pandemic.
Cooperative Governance and Conventional Affairs (Cogta) minister Nkosazana Dlamini-Zuma argued that the ban eased the burden on hospitals and decreased the prospect of contagion from cigarette sharing.
In response, critics highlighted an explosion in black-market gross sales and a hunch in tax income for the Nationwide Treasury.
In the course of the time of the ban, conservative estimates are that between R4.5 billion and R6 billion was misplaced in excise taxes on tobacco merchandise, whereas 300,000 jobs had been placed on the road. Analysis – which now included the NIDS-CRAM survey – reveals that the impact on smoking habits was minimal.
Bernard Sacks, Tax Accomplice at Mazars, mentioned that the long-term influence of the cigarette (and alcohol) bans on tax income in South Africa is sort of incalculable.
“It’s estimated the excise taxes that SARS couldn’t acquire on account of the product bans had been round R13 billion – however that’s solely a part of the image. This determine excludes any VAT losses, which – although troublesome to calculate – are more likely to quantity to a number of billion rand.
“Whereas excise taxes are solely imposed when that product is manufactured and offered, stopping the sale of alcohol and cigarettes additionally halts all financial exercise all through the complete worth chain,” he mentioned.
For instance, uncooked supplies aren’t being offered, nothing is being spent on transport, and packaging isn’t being produced.
“Ultimately, the ripple impact of taking only a few merchandise off the market leads to an unimaginable quantity of misplaced tax income, which provides as much as many a whole lot of tens of millions of rand misplaced every month,” he mentioned.
On the time of the tobacco ban, analysts pointed to R35 million in taxes being misplaced day-after-day.
Authorities retains pushing
Whereas tobacco merchandise have been out there since August 2020, there are worries that one other ban might be imposed at authorities’s whim.
In courtroom filings associated to the ban, Dlamini-Zuma particularly indicated that it still remains an option for presidency below the Catastrophe Administration Act, and as a part of the its response to the Covid-19 pandemic.
Nevertheless, in August, Dlamini-Zuma agreed to hold a public participation process ought to she resolve to reinstate a ban on tobacco gross sales, as a part of a settlement of a separate lawsuit introduced by truthful commerce physique, FITA.
Authorities has continued to point out assist for the ban, difficult authorized bids from tobacco firms and business our bodies to attempt to forestall such motion sooner or later.
Within the newest authorized motion, the Western Cape Excessive Courtroom is now set to rule on authorities’s go away to attraction a December 2020 judgement which discovered the lockdown ban on tobacco gross sales unconstitutional and invalid.