Government urged to act against illicit tobacco trade as BATSA closure looms
As the British American Tobacco South Africa faces potential closure of its manufacturing facility, COSATU calls for urgent government action to combat the illicit tobacco trade, which threatens 230 jobs and exacerbates the country's unemployment crisis.
Image: Courtney Africa / Independent Newspapers
The looming closure of British American Tobacco South Africa’s (BATSA) sole local manufacturing facility, risking 230 jobs by 2026, has ignited a fierce response from the Congress of South African Trade Unions (COSATU).
The union is demanding an immediate, comprehensive, and multi-pronged approach from the government to combat the "explosion" of the illicit cigarette trade, which BATSA blames for making local production "unviable".
COSATU’s Parliamentary Coordinator, Matthew Parks, expressed alarm over the potential job losses.
"We cannot afford to lose more jobs with an already dangerously high unemployment rate of 42.4%," Parks stressed, highlighting the severity of the crisis.
The union argues that the keys to winning the war against the tax-evading market lie squarely with law enforcement and the state.
The scale of the illicit market is staggering. Parks pointed to estimates suggesting that illegal tobacco now accounts for a shocking 75% of total sales, a figure he said "should concern all South Africans".
The national fiscus is bleeding, with Tax Justice SA estimating an annual loss of R30 billion in excise tax revenue — money COSATU notes is desperately needed to fund public services like healthcare.
This massive growth, Parks explained, has been rising at exponential rates, particularly since the temporary sales ban during the Covid-19 lockdown.
The core issue is price; illegal tobacco products, which circumvent tax requirements, are being sold on average at just 25% of the price of legal products.
The consequences are twofold. Firstly, the jobs of workers at legally compliant companies like BATSA, who adhere to the sin tax regime, are directly threatened.
Secondly, the influx of cheaper tobacco makes smoking more accessible and appealing, particularly to young people.
"The avoidance of the sin tax regime will fuel a rise in smoking and rob the state of money needed to fund public healthcare, including to treat patients with lung cancer caused by smoking," Parks warned.
While BATSA is cutting its losses — citing that the facility is operating at only 35% of its capacity due to the volume loss — COSATU has urged the company to engage with labour representatives and find alternative options instead of sending workers "to the unemployment queue".
The impact of the closure will ripple far beyond the factory floor, hitting suppliers, logistics providers, contractors, and the wider Lesedi community.
COSATU is not just raising the alarm; it is pushing for specific, high-impact interventions, explained Parks.
The union has been a consistent voice, alongside the South African Revenue Service (SARS), health organisations, and legally compliant traders, in warning Parliament and the government about the crisis.
In terms of the proposed interventions, Parks called for Parliament to expedite the passage of the "progressive and bold" Tobacco and Electronic Delivery Systems Bill.
The union wants this legislation to strengthen the tracking and tracing of all tobacco-related products and to require 24/7 monitoring of all tobacco company premises, including their warehouses.
Furthermore, COSATU is demanding that SARS and the South African Police Service (SAPS) be given the necessary tools and skilled personnel to ramp up their crackdown on illegal imports and sales.
This includes "door-to-door inspections of all tobacco-related product sellers’ premises, the arrest and prosecution of those found to be involved in illegal sales, and the confiscation and destruction of illegal products," Parks stated.
For the war to be won, COSATU insists on a close partnership between SARS, SAPS, the National Prosecuting Authority, and the State Security Agency, alongside legally compliant tobacco businesses and farmers, and labour.
"This is a war that we cannot afford to lose," Parks concluded, making it clear that for COSATU, the fight against illicit tobacco is a direct fight for jobs, public health, and the integrity of the national revenue base.