It’s easy: you can spot illegal cigarettes by their price.
Illegal cigarettes are easily identified by their price: any pack of 20 cigarettes selling for below R19.16 in 2019 is suspicious. This is because cigarette manufacturers must pay excise tax, calculated at R16.66 for a pack of 20 cigarettes post Budget 2019, as well as the requisite VAT. Therefore, Minimum Collectible Tax (MCT) of R19.16 in excise tax per pack of 20 cigarettes.
As confirmed by an Eastern Cape High Court judgment in 2015 (National Director of Public Prosecutions v Adan, 2015), selling a pack of 20 below MCT is an indication that the requisite taxes may not have been paid, which is a contravention of the Customs and Excise and the Income Tax Acts. Most illegal cigarettes are sold significantly below MCT.
The sale of cheap cigarettes undermines carefully determined tax policy by reducing the sale price of cigarettes. Excise tax on tobacco plays a crucial part in a pricing policy that is aimed at reducing the affordability, and hence demand, of cigarettes. Essentially, cheap illegal cigarettes make smoking more accessible to those who might be deterred by higher prices.