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- A R2.90/ml tax on nicotine and non-nicotine vape juice will be implemented next month which should increase the prices of vaping products.
- Asanda Gcoyi, the CEO of the Vapour Products Association South Africa, says the tax is too high and will push more people to smoke.
- But representatives of an excise tax research unit say the tax doesn't go far enough.
- For more stories, visit the tech and trends homepage.
A sin tax for vapourised tobacco products will be introduced for the first time in South Africa next month.
The vaping industry believes the tax goes too far, but a research unit on the economics of excisable products says it doesn't go far enough.
The introduction of the R2.90/ml tax on vape juice on 1 June could more than double the price of the product in some instances, according to Asanda Gcoyi, CEO of the Vapour Products Association South Africa (VPASA).
R290 tax will be levied on a 100-millilitre bottle of vape juice, which costs R200, raising the price to R490 if all of the tax is passed on to consumers.
Gcoyi says the vaping industry is not surprised by the decision to impose the tax because it was discussed over several years.
"What is perhaps not ideal is the rate," she adds.
"The R2.90/ml as an introductory rate, in our view, is too high."
The VPASA is expecting a 26% decrease in the demand for vape juice after the excise is introduced, which will affect businesses and employment, Gcoyi says.
The VPASA's estimates show that 2 250 jobs could be lost by the end of the year.
She believes people will "go back" to smoking relatively cheaper tobacco products.
Not far enough
But in a written submission to Parliament, director of the Research Unit on the Economics of Excisable Products (REEP) Corné van Walbeek has argued that the R2.90/ml tax may not go far enough to curb vaping.
The REEP proposed a R5/ml tax with a minimum of a R50 tax burden that would apply to the sale of electronic nicotine and non-nicotine delivery systems.
Kirsten van der Zee, a research officer at the REEP, says that with tobacco products, the excise tax levied on a product is generally around 40% of the price the product would sell for.
Under the R2.90/ml tax scheme, tax for some products, such as the disposable Airscream AirPops, will be as low as 8.4% of the retail price.
Van der Zee says that while she is not aware of anyone who has forecast the demand reduction for vaping products that will come from the R2.90/ml, she expects the decrease to be much smaller than the 26% reduction Gcoyi cites.
She says former research into the impact of tobacco taxes on cigarette demand suggests that the effect will be smaller than what Gcoyi suggests.
Van Walbeek says that while tobacco equivalence, or treating vaping products similarly to tobacco products, is controversial, the R2.90/ml tax yields tax burdens for electronic cigarettes that are consistently below tobacco tax burdens.
Van der Zee says vaping products don't necessarily have to be taxed at the same level as tobacco products are, but should be a lot closer.
Health implications
Gcoyi and Van der Zee have different ideas about the health implications of vaping.
Gcoyi argues that the best available scientific research suggests that vaping only poses 5% of the health risks of smoking. She also says vaping provides an alternative to smoking that is easier for smokers to maintain than cold quitting or substitutes, such as nicotine patches.
"In a perfect world, no one would be a nicotine user. In a perfect world, we wouldn't have the concept of harm reduction."
She adds that while vaping has adverse health effects, it is a form of harm reduction that moves people away from smoking.
She says:
She also argues that the sin tax imposed on vaping products should be proportional to the harm caused by vaping.
Van der Zee says that it is in the vaping industry's interests "to pull out those types of findings".
READ MORE | New Zealand stubs out smoking, passing wide-ranging tobacco ban
At the very least, she says, e-cigarettes can be used as a "gateway" for people who have never smoked cigarettes to begin using nicotine. This doesn't mitigate harm but creates a new avenue for individuals to adopt a harmful habit.
The jury is still kind of out for are they more a cessation tool or are they more a kind of gateway.
She adds that the health impacts of vaping are uncertain and the best policy position is to be cautious as opposed to assuming it's allowing people to quit smoking.
REEP will release more data later this month that could provide more clarity on some of these topics.
Countries around the world are grappling with how to regulate vaping and nuance is needed in discussions on the topic, according to Van der Zee.
