Illicit cigarettes make up 75% of local SA market
Petrus Potgieter
The tobacco plant contains nicotine, a natural insecticide that some people enjoy using in small quantities because of its proven stimulative effect on the nervous system and its anxiety-reducing properties. Nicotine is addictive, and its use usually increases the heart rate and blood pressure. Other than that, nicotine is not particularly harmful, although consuming it by smoking (in the classical sense, in a pipe or as a cigar or cigarette) can have many adverse effects on smokers’ health because of other substances in the smoke. Yet many people enjoy it, just like many people enjoy chocolate cake or the occasional second (or third) drink – activities that are but lightly regulated despite them also being strongly linked to worse health outcomes.
Fewer than 60% of deaths in South Africa are attributed to non-communicable diseases, the chief among which happens to be diabetes, and not one of the smoking-related groups of conditions. Yet “[t]he fight against tobacco is on” according to the minister of health while chocolate cake and alcohol roam free and people die from communicable diseases, violence and accidents in large numbers. On 29 August 2025, Parliament’s Portfolio Committee on Health concluded public hearings on the Tobacco Products and Electronic Delivery Systems Control Bill. Key features of the bill include:
- A plain packaging requirement for cigarettes and a ban on display at the point of sale;
- A ban on cigarette vending machines;
- Further bans and the power to ban smoking, including and outright ban on smoking in private dwellings used for “domestic employment or otherwise as a workplace” which means most of your houses;
- Broad powers to regulate the trade in and use of “electronic delivery systems” i.e. vapes, whether they contain nicotine or not.
As Martin van Staden has pointed out, the legislation is based on World Health Organisation (WHO) recommendations and, in fact, closely follows legislation passed as early as 2011 in countries like Australia and New Zealand. Australia now has excise taxes of around $1.50 per single cigarette as well as extensive restrictions on advertising, display, and sales of tobacco and vaping products. It is no wonder that the illicit trade is booming and that in August 2025 the authorities in Queensland seized more than 7 million cigarettes as well as vaping products in a single raid. The suburbs of Melbourne have recently seen arson attacks as part of an apparent “tobacco war” by organised crime groups. Yet, the percentage of the Australian population that smokes or vapes has been stagnant since the strict legislation was introduced.
Unlike Australia, South Africa is not even an island and is not particularly law-abiding. We have a porous border on the Limpopo with a major tobacco-producing country. Indeed, illicit cigarettes already make up around 75% of the local market in South Africa. The illicit trade was given a massive boost during the COVID years by an extended and unusual ban on tobacco and nicotine sales. During the ban, only 9% of smokers quit, with 70% indicating that they would not take up smoking again after the ban. The result of a complete ban on sales was therefore a reduction of 6,3% (seen optimistically) in the number of smokers. At least 94 out of 100 continued to smoke.
For the proponents of the new Tobacco Bill, a realistic upside potential is therefore a reduction in the number of people smoking or vaping of between 0% (the Australian case) and about 6% (as under the South African Covid ban). This is nothing if not extremely modest. For those saying, “but think of the children”, please consider that the children are the ones most likely to know where to find the illicit vapes or cigarettes. The Canadian province of Quebec banned vape flavours other than tobacco in 2023 with the result that many vapers have returned to cigarettes and more teenagers vape than before. One is reminded of Voltaire’s bons mots: “ice-cream is exquisite – what a pity it isn’t illegal”, meaning that banning it would make it even more delicious.
The main downsides of further restrictions on the use and trade in tobacco, other than a great offence to personal liberty, flow from the strengthening of an illicit and criminal network of supply. Criminals will need to bribe and use violence (even more) to keep the police out of their business. Consumers will suffer because a black market (like that for all drugs) prevents reputable suppliers from guaranteeing and signalling product quality. The illicit market in South Africa is already possibly the biggest in the world and has created an unhealthy situation. The high excise duties on cigarettes exacerbates this. The minimum tax (excise and VAT) collected on a pack of cigarettes is R26,22 so if a packet sells for R30,00 then the retailer and manufacturer must share the R3,78 that remains after tax. This is the reason why quality cigarettes now retail for close to R75 per pack in the formal trade, which is obviously much more than the average consumer in South Africa can afford to pay.
The resultant rampant growth in the illicit trade not only damages the existing compliant tobacco product producers but also negative impacts on SARS revenue. Tobacco excise income declined 29,6% in ten years and that is on nominal terms, without adjusting for inflation. Almost all South Africans would agree that crime and violence are bigger problems than the use nicotine. Rather than a bill that is likely to increase crime and violence, why not rather scrap excise taxes on tobacco and vape products to destroy the advantage that the illicit industry has and give poorer consumers access to better quality products?
The Author
Professor Petrus Potgieter, Department of Decision Sciences, Unisa, is an Associate of the Free Market Foundation. He writes in his personal capacity.