Press release – FITA – for immediate release

FITA has noted Cabinet’s approval of the Tobacco Products Control Amendment Bill.

We understand and accept the need for government to introduce controls and measures to deal with the trade of tobacco products as a principle. Without going into any specifics insofar the Bill, we generally support government and submit to its sovereignty and role to manage trade. Having said that, we believe that any policies or laws introduced in the country should and must include a consultative approach. We contend that in this instance, government should do more to consult across the industry.

FITA, in its representative capacity of local tobacco manufacturers, shares its members’ sentiments in being cautiously optimistic on some of the aspects of the proposed legislation. FITA recognises that these measures will directly impact the size of the tobacco industry, and will likely see further shrinkage thereof.

FITA wishes to adapt to the changing market conditions, and eagerly welcomes some of the measures that will potentially have the knock-on effect of levelling the playing fields. FITA has been at pains to shed light on the disproportionate treatment of, and by, the dominating large multi-nationals and unscrupulous activities attributed to them.

FITA acknowledges that the amendments will lead to a fiscal challenge for its members, as they will be at the mercy of a shrinking market. Nonetheless, FITA commends certain aspects of the Health Ministry’s logic and welcomes that much of it cannot be faulted.

Conversely, TISA members have in the past threatened to turn their back on the South African market in response to the proposed changes. They have used heavy handed rhetoric, holding government to ransom, stating they will close their plants.

In contrast, FITA hopes and trusts that these measures will be introduced after full consultation with all the role players in the industry and not just those big companies that seem to hold much sway over certain government officials.

At the same time, we are of the view that there is an inordinate focus on what is commonly referred to as “illicit tobacco trade” which limits the debate to only certain practices within the industry that lead to losses to the fiscus. We have been at pains to attempt to widen the scope of the debate and the attention of government towards aggressive tax base erosion practices. These lead to massive outflows of capital from South African shores annually. Needless to say, because our members are not multinationals, they cannot practically engage in such practices. We have noted however, that in 2014, at least one multinational notified its shareholders of a tax dispute of almost a billion Rands. We believe government should approach the industry more holistically and as such should include in its policy and laws, mechanisms that will deal with this scourge. Aside from this, we have put evidence to various law enforcement agencies and the tax authority, evidence of anti-competitive practices, industrial espionage, spying on politicians, and sabotage and untoward relationships between multinationals, their service providers and agents of a nature that can only be described as ‘state capture’. We implore on the authorities to expand their focus on policy and legal developments to safeguard the industry, and protect fair trade, by also looking into these aspects.

In addition, we call on our law enforcement agencies and tax authority to demonstrate equal treatment and fair play across the industry, which would naturally mean visible and decisive interventions, investigations and prosecutions of those multinationals engaged in these practices. By not doing so, the inevitable perception created, is that multinationals receive an unfair and disproportionately favourable treatment by government. This is considered unjust, unfair and not in the interests of wholly locally based tobacco manufacturers and traders.

In any event, any collaboration between multinationals and their agents with government and its officials is incompatible with Article 5.3 of the World Health Organisation’s Framework Convention on Tobacco Control to which South Africa is a signatory.

It is now very obvious that some of these multinational manufacturers have in the past used the so-called “collaboration” with government officials and bodies on so-called Anti-Illicit Trade to:

  1. Circumvent the strictures of the Framework Convention on Tobacco Control and its International Tobacco Control Policy Evaluation Project. This they achieve by using so-called “cooperation” with authorities as a “Trojan Horse” to gain influence and access to areas of tobacco control which, were the provisions of the Framework Convention on Tobacco Control enforced, would be outside of their reach. An example is their above mentioned opposition to the proposed “Plain Packaging” on the spurious grounds that it will increase counterfeit and smuggled tobacco.
  1. To position and “present” themselves as part of the “solution” to end all illicit tobacco trade and thereby increase their ability to influence policy in this area and to attempt to keep intelligence and law enforcement actions on the illicit tobacco trade under their control and focused anywhere else except on themselves.

We therefore call on government to ensure that all its divisions and officials conduct their interactions with the tobacco industry strictly according to the Framework Convention on Tobacco Control and their International Tobacco Control Policy Evaluation Project.

Issued by the Fair-trade Independent Tobacco Association: 7 May 2018

For queries kindly contact Monique Vogel t: 011 044 5355; e: Monique@fita.co.za

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