The SA Federation of Trade Unions (Saftu) said the proposed closure of British American Tobacco (BAT) is the latest example of big corporations shutting down local operations, warning this trend is steadily turning South Africa into a warehouse economy. It also called on parliament to not pass the Tobacco Control Bill in its current form, as it would weaken legal tobacco producers while strengthening illicit and criminal operators. The bill, if passed, would accelerate factory closures and “finish off thousands of remaining manufacturing jobs”, Saftu general secretary Zwelinzima Vavi said in Johannesburg on Thursday.
He was briefing the media following the labour federation’s meeting with BAT regarding the proposed closure of its Heidelberg manufacturing plant. The decision by the London- and Johannesburg-listed company will result in the group not manufacturing cigarettes locally for the first time in more than 50 years, resorting to imports to serve the South African market. Vavi characterised the proliferation of illegal cigarettes as the “total murder of the economy”.
He said the proposed closure threatened 200 direct jobs and thousands of indirect jobs. The country was being turned into a “warehouse economy”, as corporations had steadily closed factories and relocated production overseas or to neighbouring countries, while keeping distribution and sales networks in the country. [BAT’s proposed closure] mirrors Goodyear closing its tyre plant in Kariega, while retaining distribution networks,” Vavi said, while blaming the effect of sin taxes, saying since 2014 they had increased by about 88%.
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Illicit cigarette manufacturers do not pay excise tax to the SA Revenue Service (Sars), enabling them to undercut the prices charged by companies that are compliant. The illicit trade costs Sars R28bn a year, according to BAT. Saftu wanted parliament to not pass the Tobacco Control Bill and engage workers first.
Among other things, the bill also proposes introducing graphic health warnings and plain packaging for all tobacco and nicotine-containing products, including e-cigarettes. It also proposes a ban on the sale of single cigarettes, prohibits vending machines and point-of-sale advertising, and introduces further restrictions on smoking in public places.
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