Tax revenue lost due to illicit cigarettes in South Africa: 2002-2022.

OBJECTIVE: To estimate lost excise and value-added tax (VAT) revenue as a result of illicit cigarette trade from 2002 to 2022. DESIGN: Using gap analysis, we estimated the number of illicit cigarettes by calculating the difference between the number of self-reported cigarettes (derived from nationally representative surveys) and the number of legal (tax-paid) cigarettes (derived from government sources) from 2002 to 2022. We then calculated the excise and VAT revenue that the government lost through illicit trade, taking into account that some people would have quit or reduced their consumption if cigarette prices had been higher (ie, tax paid). SETTING: South Africa. OUTCOME MEASURES: Illicit trade estimates and lost revenue estimates. RESULTS: The illicit cigarette market comprised 5% of the market in 2009, peaked at 60% in 2021, and decreased to 58% in 2022. Accounting for the fact that some people would have reduced their consumption if cigarette prices had been higher (had the illicit marke not existed), the government lost R15 billion in excise revenue and R3 billion in VAT revenue in 2022. From 2002 to 2022, the government lost R119 billion (2022 prices) in excise and VAT revenue. The majority of the lost revenue occurred in the period 2010 to 2022, where R110 billion (2022 prices) in excise and VAT revenue was lost. A comprehensive sensitivity analysis indicates that the estimated lost revenue of R119 billion from 2002 to 2022 falls within the range of R65 billion to R130 billion (all 2022 prices). CONCLUSIONS: The South African government has been losing a significant amount of revenue by not receiving excise and VAT from all cigarettes consumed in South Africa. This trend is likely to continue if the government does not secure the supply chain from the point of production to the point of sale.

A Media Analysis of the COVID-19 Tobacco Sales Ban in South Africa.

The South African government introduced a nationwide lockdown in March 2020 to mitigate the spread of COVID-19. Among other restrictions, the government banned the sale of tobacco products. The ban lasted for nearly five months. We performed a Google search using the keywords smok*, puff*, lockdown, tobacco, and cigarette* for articles published in English from 23 March 2020 to 18 December 2020. This yielded 441 usable online media articles. We identified and categorised the main arguments made by proponents and opponents of the tobacco sales ban. Three themes were identified: medical, legal, and economic/financial. Legal aspects were covered in 48% of articles, followed by economic (34%), and medical aspects (18%). The media was generally ambivalent about the tobacco sales ban during the first five weeks of lockdown. Sentiment subsequently turned against the ban because the medical rationale was not well communicated by the government. There was limited empirical evidence of a link between smoking and contracting COVID-19, and the sales ban was ineffective since most smokers still purchased cigarettes. Policy framing in the media plays an important role in how the public receives the policy. Any future tobacco control policy intervention should be better considered, especially within the context that cigarettes are easily accessed on the illicit market in South Africa.

The impact of cigarette prices on smoking onset and cessation: evidence from Vietnam.

BACKGROUND: Vietnam is a country with very high smoking rates among men. According to a Global Adult Tobacco Survey (GATS) conducted in 2015, the daily smoking prevalence among Vietnamese men was 39%. METHODS: We used data from the 2010 and 2015 Vietnamese GATSs and cigarette price data from General Statistics Office of Vietnam. Since smoking prevalence is low among women, we only considered men. Using discrete-time hazard models, we estimated the effect of cigarette prices on smoking onset and cessation. Sensitivity analyses are conducted using different model specifications. RESULTS: We find that higher cigarette prices reduce the probability of smoking onset. A 1% increase in the cigarette price reduces the hazard of smoking onset by 1.2% (95% CI -2.12% to -0.28%). This suggests that increases in tobacco taxation, which translate to price increases, can reduce smoking onset. We did not find evidence that cigarette prices impact smoking cessation among men in Vietnam. CONCLUSION: Vietnam should continue to increase excise taxes on tobacco products to reduce smoking onset. Since smokers are resilient to excise tax increases, other tobacco control policies, such as smoke-free areas and tobacco advertisement bans, should be better enforced to encourage people to quit. Other policies not yet implemented, such as plain packaging of tobacco products, may also encourage smokers to quit.

Measuring the illicit cigarette market in the absence of pack security features: a case study of South Africa.

There are several ways to measure the illicit cigarette market. In South Africa, different methods were used to triangulate results. The aim of this paper is to assist researchers to decide which method is most suitable to their context, especially for countries that do not have security features on cigarette packs (eg, tax stamps). We analysed the methods and results from three published articles that used various approaches to measure cigarette illicit trade in South Africa: (1) gap analysis, (2) price threshold method using secondary data from a national survey, and (3) price threshold method using primary data collected in low socioeconomic areas. We provide methodological insights and background information. We discuss the advantages and disadvantages of each method. The method chosen by researchers will depend on data availability, the existence or absence of security features on cigarette packs and funding. Researchers investigating illicit trade should use more than one method to increase confidence in the obtained results.

Dataset on cigarette smokers in six South African townships.

A total of 2453 smokers were interviewed in townships over two rounds of data collection. Townships are low-income, urban areas characterised by overpopulation, poor service delivery, crime, and poor socioeconomic outcomes. Township residents typically live in poverty. Data were collected from six townships in four of South Africa's nine provinces, namely Gauteng (Eldorado Park and Ivory Park), Western Cape (Khayelitsha and Mitchell's Plain), Free State (Thabong) and KwaZulu-Natal (Umlazi). These townships were chosen to represent both the geographical and racial spread of low socioeconomic areas in South Africa. Round 1 data (n = 1260) were collected from October to November 2017, and round 2 data (n = 1193) were collected from July to August 2018. The sample includes two of South Africa's four population groups: African and mixed race (locally referred to as "Coloured", which describes people of mixed Khoisan, Malay, European, and black African ancestry). Since few Whites and Asians live in townships, they were not sampled. Households were selected via a random walk through each township. One smoker per household was interviewed (if a household contained at least one available smoker). We aimed to interview 200 adult smokers (aged 18+ years) per township per round. If a household had more than one smoker, a random selection determined which smoker to interview. Respondents were asked about their most recent cigarette purchase, specifically packaging type (single stick, pack, or carton), number of items purchased, brand, type of outlet where the cigarettes were bought, and the total amount paid for cigarettes. Respondents were also asked about other tobacco use in the household, and about their perceptions regarding illegal cigarettes. Socioeconomic and demographic information was collected at the individual and household level. The data has been used to estimate illicit trade (https://tobaccocontrol.bmj.com/content/early/2020/03/10/tobaccocontrol-2019-055136.info), and to analyse the determinants of smoking intensity (https://www.sciencedirect.com/science/article/pii/S2211335520300590).

The illicit cigarette market in six South African townships.

BACKGROUND: We estimate the size of the illicit cigarette market in low socioeconomic areas in South Africa before and after a tax increase. In 2018, the real excise tax increased by 3% and the value-added tax (VAT) rate increased from 14% to 15%. Thus, the real tax on cigarettes increased by 4%. METHODS: A total of 2427 smokers were interviewed over two rounds of data collection (1234 before the tax increase and 1193 after). Data were collected in six townships across four of South Africa's nine provinces. Smokers were asked about their most recent cigarette purchase. Cigarettes purchased for R1 (US$0.08) or less per stick are presumed illicit, based on a threshold price, which includes production costs and taxes. RESULTS: In 2017 and 2018 respectively, 34.6% and 36.4% of smokers in the sample purchased illicit cigarettes. The increase in the proportion of illicit purchases was not statistically significant. Smokers with relatively low socioeconomic status, those who have low levels of education and those who are older or unemployed are most likely to purchase illicit cigarettes. CONCLUSIONS: The illicit cigarette trade in South African townships is widespread. The government should implement an independent track and trace system to curb tax evasion. This would reduce the availability of illicit cigarettes, improve public health and increase excise tax collection.

Illicit cigarette trade in South Africa: 2002-2017.

BACKGROUND: Increasing cigarette excise taxes is widely recognised as the most effective measure to reduce the demand for cigarettes. The presence of illicit trade undermines the effectiveness of tax increases as both a public health and a fiscal measure, because it introduces cheaper alternatives to legal, full-priced cigarettes. OBJECTIVE: To assess trends in the size of the illicit cigarette market in South Africa from 2002 to 2017 using gap analysis. METHODS: Tax-paid cigarette sales are compared with consumption estimates from two nationally representative surveys: the All Media and Products Survey and the National Income Dynamics Study. We explore the size of the illicit cigarette market and its changes over the period 2002-2017. RESULTS: Since 2009, illicit trade has increased sharply. We estimate that illicit trade is between 30% and 35% of the total market in 2017. The acceleration in the growth of the illicit market since 2015 corresponds with a turbulent time at the South African Revenue Service, when many of the enforcement functions were greatly reduced. CONCLUSIONS: The current levels of illicit trade are extremely high and need to be addressed urgently by implementing effective control mechanisms such as a track and trace system to monitor the production, taxation, and sale of cigarettes.

Impact of tax increases on illicit cigarette trade in Mongolia.

BACKGROUND: The Mongolian government increased import tobacco tax by 30% in May 2017 and excise tobacco tax by 10% in January 2018. To assess the impact of these tax increases on illicit cigarette trade, we estimate illicit trade before and after tax increases. METHODS: Discarded cigarette packs were collected in the capital city and in two provinces near China, the Russian Federation and Kazakhstan. Tax increases occurred between all three rounds (April 2017, August/September 2017, May/June 2018). Cigarette packs are identified as illicit if there is evidence that tax was not paid. This is deduced from the absence of the Mongolian excise tax stamp, or the absence of traces of a tax stamp (glue residue). Data are weighted to represent the areas sampled. RESULTS: In round 1, 15.4% (95% CI 14.6% to 16.2%) of the 7494 collected packs were illicit. This estimate decreased to 13.6% (95% CI 12.7% to 14.5%) in round 2 (5852 collected packs) and to 6.3% (95% CI 5.7% to 6.9%) in round 3 (6258 collected packs). Illicit cigarettes originated primarily from the Republic of Korea and Ukraine, but some were manufactured in Mongolia. While the majority of illicit products are supplied by global companies (Korea Tobacco & Ginseng, Imperial Tobacco and Philip Morris Kazakhstan), one local company, Mongol Tobacco SO, is also implicated. CONCLUSIONS: The share of illicit cigarettes declined between rounds 1 and 2 despite the import tax increase, and this trend continued in round 3 despite the excise tax increase.

Trends in cigarette demand and supply in Africa.

BACKGROUND: Since the tobacco epidemic is moving from developed to developing countries, it is important to understand trends in cigarette demand and supply. We focus on the African market since it offers the tobacco industry one of the best expansion potentials. DATA: A large variety of data from commercial (Canadean, Euromonitor International, tobacco industry reports), governmental (United Nations Comtrade, national statistics), and academic sources (Cigarette Citadels Map and journal articles) were utilized. METHODS: We compile data from multiple sources to study cigarette demand in Africa from 1990 to 2012. We then focus on cigarette production and international cigarette trade to detect structural changes in cigarette supply over the past few decades. We contrast data from these different sources. RESULTS: Cigarette demand and supply data in Africa is limited and is sometimes inconsistent across different sources. Given this caveat, we found that the overall demand for cigarettes (measured by sales) in the 22 countries covered by Canadean, which represents 80% of Africa's population, increased by 44% (from 165.6 billion cigarettes to 238.5 billion cigarettes) from 1990 to 2012. This higher demand has been met by cigarette production increasing in these 22 countries by 106% during the same period. As a result, Africa has moved from being a net importer to a net exporter of cigarettes. At the same time, cigarette production has become more concentrated as the tobacco industry has strategically identified certain countries as production hubs. CONCLUSIONS: Monitoring the production, consumption and trade of cigarettes by improving the quality of surveillance is necessary to understand the demand and supply of cigarettes not only in Africa, but globally.

The Prevalence of Fetal Alcohol Syndrome and Its Impact on a Child's Classroom Performance: A Case Study of a Rural South African School.

Alcohol consumption is high among farm labourers in the Western and Northern Cape of South Africa. Excessive alcohol consumption during pregnancy is common, resulting in a high prevalence of Fetal Alcohol Syndrome (FAS) among children. FAS causes intellectual and behavioural problems, which create considerable obstacles to a child's education. The aim of this study is to provide a prevalence estimate of FAS in a rural school and to examine the effects of FAS on learners' educational outcomes. The study was conducted at a farm school near Clanwilliam in the Western Cape of South Africa. The sample comprises 166 learners from Grades 1 to 4. Educational outcomes include class scores (Afrikaans Home Language and Mathematics), reading ability, and classroom behaviour. A physician diagnosed FAS using a three-stage process. We find FAS prevalence of 127 per 1000 (12.7%). Children with FAS score significantly lower (at the 10% level) for home language and behaviour than children who do not have FAS. Large-scale interventions in rural areas of the Western and Northern Cape that specifically target females of child-bearing age, as well aschildren with FAS, are necessary.

Determinants of regular smoking onset in South Africa using duration analysis.

OBJECTIVES: South Africa has achieved significant success with its tobacco control policy. Between 1994 and 2012, the real price of cigarettes increased by 229%, while regular smoking prevalence decreased from about 31% to 18.2%. METHODS: Cigarette prices and socioeconomic variables are used to examine the determinants of regular smoking onset. We apply duration analysis techniques to the National Income Dynamics Study, a nationally representative survey of South Africa. RESULTS: We find that an increase in cigarette prices significantly reduces regular smoking initiation among males, but not among females. Regular smoking among parents is positively correlated with smoking initiation among children. Children with more educated parents are less likely to initiate regular smoking than those with less educated parents. Africans initiate later and at lower rates than other race groups. CONCLUSIONS: As the tobacco epidemic is shifting towards low-income and middle-income countries, there is an increasing urgency to perform studies in these countries to influence policy. Higher cigarette excise taxes, which lead to higher retail prices, reduce smoking prevalence by encouraging smokers to quit and by discouraging young people from starting smoking.

Waterpipe and Cigarette Smoking among University Students in the Western Cape, South Africa.

OBJECTIVE: Cigarette smoking in South Africa decreased sharply since the early 1990s. Waterpipe smoking increased, especially among students. We estimate the prevalence of waterpipe and cigarette smoking and associated characteristics among university students in the Western Cape. METHODS: An anonymous self-administered online questionnaire was sent to all registered students at 4 public Western Cape universities. The 4578 valid responses were weighted to represent the Western Cape's university student population. We present descriptive statistics and logistic regressions. RESULTS: We found that 63% of Western Cape university students ever smoked waterpipe, 9.9% of students smoked waterpipe in the past 30 days and 17.7% of students smoked cigarettes in the past 30 days. Waterpipe smoking has a strong socialization aspect. Controlling for confounders, current waterpipe smoking is associated with alcohol consumption (positively), age (negatively), population group (mixed-race and Indian students smoke more), religion (Muslims smoke more), faculty (medical students smoke less), and spending money (positively). Current cigarette smoking is associated with similar covariates, but not with age. CONCLUSION: Waterpipe smoking in the Western Cape is widespread, but less than cigarette smoking. Because all tobacco products are harmful, the government has an obligation to impose appropriate regulatory measures to reduce waterpipe consumption.

A closer look at 'Cheap White' cigarettes.

BACKGROUND: Given the prominence of Cheap Whites in illicit tobacco discussions, we examined various definitions, market presence, brand proliferation, manufacturers, production locations, trademark ownership, prices and compliance with tax stamp and warning labels. METHODS: Data from peer-reviewed and grey literature, newspapers, trademark registries, governments/international organisation reports, and the tobacco industry were contrasted with two visual legal requirements (tax stamps and warning labels) and prices from the Tobacco Pack Surveillance System (TPackSS). RESULTS: Multiple sources identified 82 Cheap White brands and 53 manufacturers operating at least 82 production facilities. One-third of these manufacturers are in the free zones of Russia, Cyprus and the UAE. Two-thirds of the 37 Cheap White brands in the TPackSS had neither the correct health warning nor the required tax stamp in at least one country where they were purchased. Cheap Whites are on average less expensive than all other brands, but the price gap is often not as large as anecdotally reported. The cheapest Cheap White cigarettes purchased in one of the TPackSS countries irrespective of the presence of legal signs were still more expensive than the least expensive other brands satisfying both legal requirements. CONCLUSIONS: We confirmed that many Cheap White brands do not comply with the legal requirements in countries where they are sold, but also found that some of these cigarettes appear to be sold legally even outside their country of origin. The presence of untaxed Cheap Whites undermines tobacco tax policies, while the availability of legal cheap cigarettes is a public health concern.