New Excise Duty on Vaping Products to Come into Effect from June 1

Vapers Are Fuming – DFA

A new “sin tax” on vaping products will go into effect in South Africa on June 1. It will lead to a flat excise duty on both nicotine and non-nicotine vaping liquids, adding significantly to the cost of vaping. This increase is predicted to cause a health issue, as many former smokers who have turned to vaping to help them quit could turn once more to cheaper cigarettes. An estimated 8,000 people could lose their jobs in the vaping industry as a result, further impacting the country’s already expanding unemployment rate. Activist Kurt Yeo, who founded the organisation Vaping Saved My Life, has warned of this issue, saying that the tax could lead to the closure of many small independent shops that sell e-cigarettes, creating a far wider problem than the decrease in vaping.

Background and Resistance Against the Tax

The South African government first proposed the new tax in 2022, despite attempts by the vaping industry to stop its implementation. “Government also proposes to introduce a new tax on vaping products of at least R2.90 per millilitre from 1 January 2023,” announced Finance Minister Enoch Godongwana in his budget speech in February 2022. The vaping industry is unhappy with the tax, saying that it will put the cost of vaping out of the reach of many smokers who are looking to quit and balk at spending on an expensive alternative to tobacco. It is also expected to impact small businesses and cost jobs in the industry.

The Health Impact of the Increase

Activist Kurt Yeo warned that cigarettes are more harmful than vaping and he has called for the tax to be rethought in light of the harm reduction benefits of vaping. The increase in the price of vaping will leave many smokers searching for either cheaper vaping alternatives or a return to smoking tobacco, especially since vaping is not currently regulated and taxed less than its tobacco alternative. Many former smokers have turned to vaping to help them quit smoking, with the practice generally regarded as less harmful; however, customers may not be able to afford their habit under the new regime.

The Impact on the Vaping Industry

The rise in taxes within the vaping industry is thought could lead to the closure of many independent vape shop owners unable to pay their staff. The increase is a significant concern since the vaping industry currently has no regulations. As a result, Yeo has stated that it is impossible to tax an industry where no formal standards have been established, and that a regulative product standard would be the first step in correcting this. Yeo has called on the South African Bureau of Standards to develop a standard for e-cigarettes and the associated liquids, such as nicotine, to be produced in South Africa. This would enable e-liquid manufacturers to voluntarily abide by the standards and support the industry in becoming more structured.

Illicit Trade Opportunities

The increase in vaping product taxes could lead to a rise in illicit trading opportunities, causing difficulties for legitimate industry compliance requirements as well as raising the price of legal products further. This outcome would rob the economy of a considerable tax revenue, according to the Tax Justice South Africa organisation. The issue of illicit tobacco has already outstripped the market for legal cigarettes in South Africa, with two out of every three cigarettes sold being illicit, robbing the economy of R50 million in tax revenue daily.

Waste Mismanagement Issues

Increasing popularity brings increasing harm to the environment, as a popular new vaping habit could worsen the country’s waste production problem. Vaping devices contain lithium-ion batteries and an element of heating, which makes their components and packaging e-waste according to The Institute of Waste Management of Southern Africa. Vaping waste disposal must meet some specific challenges to keep toxic substances and liquids out of landfills. An incorrect disposal option could result in these toxic substances and liquids contaminating water sources indirectly. All electronic wastes have been prohibited from landfills in South Africa since August 2021, and vape cartridges, along with their packaging, are included under the ban subjection to Vape Disposal legislation.



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