British American Tobacco Faces SA Government Over Cigarette Ban

(Alliance News) - British American Tobacco South Africa went to court on Wednesday for the first ...

Alliance News 5 August, 2020 | 8:41PM
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(Alliance News) - British American Tobacco South Africa went to court on Wednesday for the first day of hearings in a case against a government-imposed ban on tobacco sales to limit the spread of coronavirus.

South Africans have been unable to legally purchase cigarettes since the country went into a strict nationwide lockdown on March 27.

While confinement measures are being gradually lifted, tobacco products have remained banned for the time being due to "health risks" associated to smoking.

BATSA, part of British American Tobacco PLC, covers 78% of the legal cigarette market in South Africa and decided to sue the state in May after talks with the government fell through. 

Speaking before the Western Cape High Court on Wednesday, BATSA advocate Alfred Cockrell argued the ban was "unconstitutional" and "unscientific".

Cockrell said the measure had "devastated" the tobacco industry in an already ailing economy and was costing the state around ZAR38 million, about USD2.2 million, per day in excise taxes.

Government representative Andrew Breitenbach argued the case was about "lives and livelihoods" but said the minister behind the ban had "taken steps" to allow trade between tobacco producers and cigarette manufacturers.

"The ban deals with prohibiting sales," Breitenbach added. "So infringements on rights are just incidental."  

BATSA estimates that South Africa has around 8 million smokers.

The company reported paying ZAR13 billion in taxes last year, supplying cigarettes through 50,000 outlets including grocery stores, liquor shops, informal traders and fuel stations.

Its legal action has been backed by Japan Tobacco International and by groups and organisations representing consumers, retailers and tobacco farmers, who agree that the ban is fuelling an illicit cigarette market.

The Fair Trade Independent Tobacco Association legally challenged the "irrational" ban last month, claiming it has diverted revenue away from a multi-million dollar business and into the black market.

The court has since ruled in favour of the government but granted FITA leave to appeal.

BATSA's case is scheduled to resume on Thursday.  

South Africa was already in recession before the coronavirus struck in March and the economy is now forecast to contract by more than six percent this year as a result of the pandemic.

The country is the hardest-hit in Africa with at least 521,318 infections diagnosed so far, accounting for more than half the continent's cases.

Its mortality rate has remained low however, with just over 8,800 deaths reported to date.

source: AFP

Copyright 2020 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
British American Tobacco PLC 2,625.00 GBX -1.61
Japan Tobacco Inc 1,981.00 JPY 0.41

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