People who switched from cigarettes to vaping will have to fork out more money from June 1 as an excise duty comes into effect. The ‘sin tax’ will also lead to the loss of about 8,000 jobs, adding to South Africa’s exploding unemployment numbers.
VAPERS are fuming. Soon they’ll pay much more for their habit as a new “sin tax” comes into effect on June 1, and a flat excise duty is slapped on nicotine and non-nicotine vaping liquids.
Outraged industry role-players have warned of the devastating health impact it could have because vapers were likely to revert to cheap cigarettes to feed their habit.
The increase is not a surprise: the idea was first mooted by Finance Minister Enoch Godongwana during his budget speech in February last year when he announced that “Government also proposes to introduce a new tax on vaping products of at least R2.90 per millilitre from 1 January 2023.”
Despite the vaping industry’s attempts to stop this increase, it’s going ahead. Activist Kurt Yeo, who founded the organisation Vaping Saved My Life, said it was a major step backwards for those who had migrated from cigarettes to vaping as they try to stop smoking.
“I don’t understand how a less harmful product like vaping, which has been scientifically proven, will be more expensive than a deadlier product that is available everywhere,” said Yeo.
Moreover, he has warned that up to 8,000 jobs in the vaping industry could be lost because people would look for cheaper alternatives.
Yeo’s warning came as StatsSA this week released its Quarterly Labour Force Survey (QLFS) which indicated that the number of unemployed people increased by 179,000 to 7.9 million during the first quarter of 2023, compared with the fourth quarter of 2022.
StatsSA said the household-based sample survey measured the labour market activities of individuals aged 15-64 years who live in South Africa.
Yeo said the increase in excise tax would make it virtually impossible for vape shop owners to keep their businesses open and pay staff, and he knew of at least 48 people who would be imminently unemployed.
He said the increases did not make sense because the government was taxing an industry which did not have regulations and would face a lot of resistance from the vaping industry.
“We actually don’t have a standard for this product, so I believe they put the cart before the horse here because you are effectively taxing a product that’s not currently recognised in law. I don’t know of any product out in the world that went this particular route.”
He said the South African Bureau of Standards invited his organisation and other industry role players to be part of a committee to develop a standard for e-liquids so that South African e-liquid manufacturers would be able to voluntarily abide by the standards.
“We were looking at, for example, the British Standard, which is considered the gold standard currently in the world. How these liquids are manufactured, the contents of these liquids, the nicotine strengths, and the labelling all need to fall within a particular standard. At the moment SA does not have that standard and the local vape industry is trying to regulate themselves.”
He said e-liquids imported from Europe conformed to certain standards and were tested but they didn’t know about the standards of disposables imported from China.
“A lot of the SA manufacturers of these liquids do meet these standards. They do take a lot of care, but we wanted to formalise it in the form of a document, (a) standard that applies to all e-liquids in SA.”
Yeo said one of the reasons the government wanted to impose the excise tax on vapes was to discourage the youth from smoking. “A common tactic in these kinds of sin taxes is to increase the tax and therefore dissuade consumers from using them or taking them. The youth was used as one of these points, which we 100% agree with. We do not want to see the youth using these products, but we don’t believe the tax is the way to do it,” Yeo said.
However, a study of quintile 5 schools showed that a 5 % increase in the price would not deter youth in these schools from smoking because they came from affluent households, said Yeo.
The Vapour Products Association of South Africa (VPASA), which represents manufacturers, wholesalers and retailers of smoke-free vapour products, said on its website the tax was likely to spawn an illicit industry, while punishing the legal industry through difficult compliance requirements and a rise in already expensive product prices.
VPASA has also publicly warned that people would “go back” to smoking relatively cheaper tobacco products.
While the vapers are huffing and puffing, Tax Justice South Africa said increasing excise taxes on any product in the country simply increased opportunities for criminals who make a fortune by evading those taxes.
The organisation’s founder Yusuf Abramjee said: “Our authorities have proved to be unwilling or unable to combat illicit trade, as is evident from the market for traditional cigarettes, which has been taken over by the producers of illicit, tax-evading brands.”
Abramjee said that two out of three cigarettes sold in South Africa today were illicit, and this robbed the economy of R50 million in vital tax revenue every day.
“It seems obvious that this scenario will be repeated in the vaping sector. The new taxes on vaping products are likely to double their legal price. That means double the profit margin for illicit manufacturers. In these tough economic times, it is also likely to force many vape users to switch back to smoking tobacco, thereby negating the health benefits of moving away from tobacco,” said Abramjee.
Meanwhile, as the tax battle rages, the Institute of Waste Management of Southern Africa (IWMSA) has warned that as vaping grew in popularity, so too did its harmful impact on the environment.
It describes a “vape”, or electronic cigarette, as a device that heats up a liquid to create a vapour the user inhales. Since they have a heating element and lithium-ion batteries, vapes are considered to be e-waste. IWMSA said vape waste disposal was a big undertaking because of the many chemicals and materials used in them.
“Despite the challenges, the correct vape disposal is absolutely crucial. After all, it keeps toxic substances and dangerous liquids out of general landfills,” said The Institute of Waste Management of Southern Africa vice-president Patricia Schröder.
She said: “Even in the form of residues, these toxins can leak into natural habitats and river systems, where they can eventually contaminate our fresh water sources.”
Schröder said all electronic waste was banned from landfills in August 2021.
“Due to the fact that vape cartridges contain both electronic components and packaging, they are included in this legislation. However, there is definitely still a need for greater acceptance and understanding on the part of manufacturers and consumers.”
