The proposed excise duty on vaping products in South Africa should be imposed on all “actors” equally to ensure fair competition and an equal playing field for all participants, according to BAT South Africa. However, prices would rise, the company warned.
Speaking at a standing committee on finance, the tobacco giant represented by Dane Mouyis said that according to its own data, electronic vaping products account for less than 0.5 percent of the entire nicotine product market of South Africa, according to Business Tech.
However, there is an over-proportioned number of retailers that are creating their own vaping liquid.
Mouyis said that many people are “doing it themselves” importing a few litres of nicotine liquid only to turn it into many more vials of vape liquid – an excisable product.
Under National Treasury’s proposal, the average excise rate for e-cigarettes is proposed at R2.91 ($0.17) per millilitre and apportioned in a ratio of 70:30 between nicotine and non-nicotine elements.
To ensure that tax is gathered from this trade, Mouyis said that in collaboration with Oxford Economics, it was found that a rate of R1.45/ml should be the absolute upper limit of the duty.
The representative said that considering South Africa’s affordability, a 70 cents duty is more appropriate.
Asanda Gcoyi from the Vapour Products Association of South Africa, which represent both manufacturers and retailers, warned that the tax would drive price increases onto the consumer, and one could see the average price of vape products increase by 138% and e-liquid consumption drop by 36%.
BAT stressed that an aggressive excise tax would rush consumers away to an illicit market that would subsequently grow. Gcoyi echoed this sentiment.
The tobacco company proposed the following changes for vaping products in the country:
A registration system must be introduced with the excise for manufacturers and retailers – to open the market up to the South African Revenue Service (SARS). Gcoyi added that the proposed tax was problematic as the rationale behind it was flawed.
She said that the scientific basis of the tax is inaccurate in that the National Treasury sees the vaping industry as attempting to undermine global tobacco efforts – while many international studies have actually pointed to vaping as being a harm reduction practice dissimilar to traditional smoking.
She added that the goal of the excise is unclear as the Treasury has provided little detail on how it would be beneficial to public health, and not enough research has been concluded on youth uptake.
The introduction of the excise will have significant unintended and irrational consequences, one being that the proposed duty would make vaping more expensive than smoking and create an illicit trade – thus going against the doctrine of harm reduction, said Gcoyi.
The Vapour Products Association has since called on businesses to oppose the excise duty and for the Treasury to conduct further market research on the implications of its proposal.
Regulating the vaping industry in South Africa is complicated by deception and distraction.
By Asanda Gcoyi
The advent of electronic nicotine-delivery systems (ENDS) and electronic non-nicotine delivery systems (ENNDS) has taken the world of public health policy by surprise, it would seem. Nowhere is this more apparent than in developing and under-developed countries.
Where previously countries with little public health policymaking capacities could rely on the World Health Organization for guidance on tobacco regulation, the deep uncertainties plaguing the WHO on the best way to regulate ENNDS have left many countries unsure how to regulate important innovation in nicotine delivery.
In South Africa, this challenge has proven particularly acute. As a former leader in tobacco control, the country has struggled to institute an ENNDS regulatory framework. In May 2022, it was four years since the government first published the draft Control of Tobacco Products and Electronic Delivery Systems Bill for public comment. The bill updates the country’s longstanding Tobacco Products Control Act, first adopted in 1993.
It does this by introducing more restrictions on tobacco sales and consumption. In a stroke of policy confusion, the bill extends the restrictions imposed on combustible cigarettes to ENNDS. To date, the draft bill has not been approved by the Cabinet for tabling in Parliament, precisely because it is based on misinformation and hubris.
In general, proposals to restrict smoking and make it difficult for nonsmokers to be initiated into the habit are to be welcomed. However, it is entirely misguided to have the prevention of initiation as its sole objective of public health policy in a country with a staggering 8 million smokers out of a population of 60 million.
South Africa does not have the resources to support smokers quitting. Other than a barely functional quit line, the country does not have any smoking cessation programs sponsored by the public health system. Nicotine-replacement therapy is not freely available. There are no counselling facilities.
Asanda Gcoyi
While the South African government cannot generally be regarded as lacking in policy-making capacity, especially in the area of tobacco control, it can be concluded that shifting narratives about ENNDS have left the government in a difficult position. WHO prevarication on the topic has not helped matters.
Where government could previously rely on the WHO to issue unequivocal policy guidance, the growing impasse between the WHO and members of the public health community in support of ENNDS as a harm reduced alternative to smoking has put government at a loss on how to proceed on ENNDS regulation. Growing scientific evidence challenging the natural inclination of the WHO to castigate behaviors it does not agree with is proving especially challenging.
While the ENNDS industry in South Africa shares government’s concern about a new generation of nicotine consumers, it remains a concern that government proposals to regulate ENNDS do not correlate with the intended outcome of reducing smoking.
As has been demonstrated in places such as the U.K., ENNDS are an efficient tool for moving smokers to potentially less harmful alternatives, with some even deciding to quit. It is a major public health policy opportunity, especially for developing countries such as South Africa, to reduce their costs of public health resulting from noncommunicable diseases associated with smoking.
In the four years that the government has attempted to come up with a regulatory framework for ENNDS, the Vapour Products Association of South Africa (VPASA) has been at the forefront of calling on government to consult beyond its fellow travelers in the anti-tobacco advocacy lobby. Sadly, this has not happened.
Instead, the government has continued to rely on outdated, heavily biased studies to back up its untenable policy positions, including the rightly maligned and withdrawn study by Stanton Glantz, a researcher with the University of California, San Francisco School of Medicine, titled “Electronic Cigarette Use and Myocardial Infarction Among Adults in the U.S. Population Assessment of Tobacco Health,” published by the Journal of the American Heart Association in 2019.
Currently, the government looks set to introduce a tax on vaping products. This is partly justified on the basis of this and other problematic studies, some conducted as long ago as 2014. This happens against the backdrop of new scientific studies demonstrating the likely benefits of adopting ENNDS as part of a broader tobacco control strategy.
Regrettably, South Africa is not alone in embracing such misdirected policies on ENNDS. Whereas there are easy wins on tobacco control, it seems governments across the developing world have resolved to limit the very innovation that promises the most success in weaning smokers off their deadly habit. From Botswana to Kenya to Mauritius, governments in Africa and other parts of the world are resorting to draconian measures to control ENNDS rather than looking closely at the science and embedding this in their regulatory approaches.
Overall, smokers, especially poor ones, are likely to be the biggest losers in the overzealous regulation of the vaping industry. This is a direct result of governments that fail to take into account their duty to listen not only to the views they like but also those they may not necessarily appreciate.
The truth is that even the most rabid anti-ENNDS campaigner accepts that there are major differences between smoking and vaping. As such, it makes sense that governments should differentiate between the two behaviors when putting in place regulatory measures. Such differentiation should favor ENNDS over combustible products. This is not happening in the developing world. Certainly, it is not happening in South Africa. Quite the opposite is being pursued.
Given tobacco’s dominant and entrenched position as the preferred nicotine-delivery system for most nicotine addicts, stringent restrictions against ENNDS disincentivize smokers from switching. Sustained disinformation and outright lies about ENNDS make this worse. Governments complain about the costs of smoking to the public purse yet seek to protect the biggest drivers of such costs by protecting the tobacco industry from the only real alternative to emerge against smoking.
The VPASA will remain committed to the fight against senseless regulation in South Africa. To not do so would be to fail the millions of South African smokers who are desperate for alternatives to tobacco.
Asanda Gcoyi is the CEO of the Vapour Products Association of South Africa.
