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The illicit cigarette market in six South African townships
  1. Kirsten van der Zee,
  2. Nicole Vellios,
  3. Corné van Walbeek,
  4. Hana Ross
  1. Research Unit on the Economics of Excisable Products, School of Economics, University of Cape Town, Cape Town, South Africa
  1. Correspondence to Kirsten van der Zee, Research Unit on the Economics of Excisable Products, School of Economics, University of Cape Town, Cape Town 7700, South Africa; kirsten.vanderzee{at}uct.ac.za

Abstract

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.

  • illegal tobacco products
  • socioeconomic status
  • price
  • low-income/middle-income country
  • taxation
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Footnotes

  • Contributors HR conceptualised the study. NV and HR designed the questionnaire. NV and KvdZ managed data collection. KvdZ conducted the data analysis. All the authors contributed to the writing of the manuscript.

  • Funding This research was supported by the International Development Research Centre under the Global Alliance for Chronic Diseases research programme (grant ID number: 108442-002 and IRMA 25761), Cancer Research UK (IRMA 25171) and the Bill and Melinda Gates Foundation (through the African Capacity Building Foundation) (IRMA 20177).

  • Competing interests None declared.

  • Patient consent for publication Not required.

  • Provenance and peer review Not commissioned; externally peer reviewed.

  • Data availability statement Data available on request.

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