New smoking tax hitting South Africa next month

New smoking tax hitting South Africa next month

From 1 June 2023, nicotine-substitute solutions, including vaping products, will be included in the tax net with a flat excise duty rate of R2.90/ml.

Excise duty on vaping tobacco products has been in the pipeline for a while – the tax was first announced in finance minister Enoch Godongwana’s 2022 budget speech.

The South African Revenue Service (SARS) said that the forms which govern Tobacco Product Excise had been amended to account for vaping products.

“Manufacturers of these products are therefore required to apply for and obtain licenses for their manufacturing premises in respect of such products with SARS before 1 June 2023 and to submit their first excise duty account by 28 July 2023.”

“Special storage warehouses in respect of such products should similarly be licensed with SARS before 1 June 2023,” said the taxman.

In February this year, Asanda Gcoyi, the CEO of Vapour Products Association SA (Vpasa), said that putting the excise tax on e-cigarettes will damage the industry.

The CEO said that the government had not completed adequate impact assessments for the effect of the tax on an industry that amounted to R1.5 billion in 2022.

She said the tax could lead to a 22% drop in sales.

Concern over the tax imposition on vaping dates back to a standing committee on finance in September last year, where British American Tobacco South Africa said that the proposed duty could see the price of vape products more than double.

Gcoyi said in September that the average price of vape products could increase by 138% and e-liquid consumption drop by 36%. Both Gcoyi and British American Tobacco agreed that an aggressive tax would push consumers to the illicit market.

Vaping products are not covered by the Tobacco Products Control Act or the Medicines Act and are largely unregulated.

New legislation to regulate the industry is currently in the pipeline, with the  Tobacco Products and Electronic Delivery Systems Control Bill currently being processed.

Vaping involves inhaling from a device that vaporizes liquid solutions that may contain nicotine and other substances.

It has gained much popularity as an alternative to traditional cigarettes but has also emerged among younger generations. A recent report by Professor Richard van Zyl-Smit at UCT studied the vaping habits of over 5,500 high school students from several high-income schools.

The study found that over 25% of matric learners are using vaping devices. Furthermore, almost 30% of respondents reported using their vaping device within an hour of waking, and almost a quarter are unable to go through a school day without vaping.

Source: BusinessTech


This article was originally published by BusinessTech and does not in any way reflect the views and principles of ATCA. It is categorized under “Tobacco Industry News” to expose the tactics and strategies utilized by the tobacco industry to undermine public health.