In early May I wrote that the government’s ban on cigarette sales during Covid lockdown was misguided. Good to see this view backed up by University of Cape Town research, released on Tuesday, that points out the many problems with the ban and recommends that it be lifted immediately.
I wrote that some of the negative consequences were likely to be a huge spike in the illegal trade, plus a massive loss of tax revenue in our already ailing economy. And so it has turned out to be. UCT’s Research Unit on the Economics of Excisable Products says the sales ban has stimulated the black market and the channels to distribute illegal cigarettes have now become entrenched. It will become increasingly difficult to get rid of this. And the financial loss? For every month that the sales ban continues, the government will lose at least R1 billion in tax. Remember that one of the government’s reasons for the ban was because of the risk of spreading Covid-19 from sharing cigarettes? I thought that was a weak reason at the time because I didn’t think many people shared cigarettes. Turns out I was wrong, because the research says 50% of cigarettes smoked pre-lockdown were shared. But listen to this: since the sales ban, the number of smokers who now share cigarettes has rocketed by 430%. So that well and truly backfired! There were 23,000 people in the study. Of these, 9% said they had stopped smoking since the ban. The main reason they quit was not because of health concerns or because of following the government lockdown regulations, but because of the sky-high price of cigarettes on the black market – a market created by the government’s sales ban. The study said the average price of black market cigarettes was now 250% higher than cigarettes were before the ban. A single cigarette is on average R5.69, or R114 a packet of 20. The 9% of people who quit smoking during lockdown were those who were least addicted – no surprise there – and smoked an average of 7.8 cigarettes a day, less than half the average of 16.4 cigarettes a day the rest of the group smoked. Since level 4, tobacco companies have been allowed to manufacture cigarettes for export, which the researchers say creates a loophole: “Given the tobacco industry’s long record of involvement in illicit trade, it is likely that they will divert cigarettes, ostensibly destined for the export market, to the local market.” So in summary: 91% of smokers are still smoking despite the ban, the sharing of cigarettes has rocketed, tobacco companies are still manufacturing cigarettes, and the price has gone up by 250% because all cigarettes sold locally are via the black market. And because of that, not a cent goes to government, which is losing a billion rand a month in cigarette taxes. So who scores? The criminals. And how is this helping fight Covid-19? It isn’t. How much longer will government pretend it is achieving something positive with the cigarette sales ban?
