Vaping Taxation: A Missed Opportunity

On 26 February 2020, Minister of Finance Mr Tito Mboweni announced that the government would impose a tax on vaping products from 2021. This tax is prompted by what the Minister calls the growing consumption of these products. It is likely also a response to growing calls by organisations such as the National Council Against Smoking which have been at the forefront of calls for government to regulate and tax vaping products, which the organisations see as a gateway to smoking.

Absent from the Minister’s announcement is a clear rationale for the imposition of a vaping tax other than to say “globally, policymakers are looking at regulating and taxing these products due to concerns about their health effects”. Such an announcement comes in the context of growing consensus that vaping is indeed a less harmful alternative to smoking. A large quantum of scientific evidence supports this view.

By their very nature, less harmful alternatives to smoking do not claim that there is no harm associated with vaping products. They simply recognise that quitting smoking is one of the most difficult decisions that any human being can ever make, due to the addictive properties of nicotine in cigarettes. It moves from the premise that if smokers are to be encouraged to quit smoking, it is sensible that they are provided with less harmful alternatives that can support their journey towards quitting smoking. This is done through the provision of nicotine, which is the main ingredient that smokers are addicted to, without exposing them to the thousands of other chemicals abundant in tobacco, more than 70 of which are known to be carcinogenic.

The Vapour Products Association of South Africa (VPASA) has been at the forefront of calls for government to take a cautionary approach in taxing vaping products as taxation could put the products out of reach for many consumers. South Africa’s position would also be largely out of step with several international jurisdictions that have taken a wait and see approach to vaping in order to properly evaluate its harm reduced qualities. This includes the UK, and most European Union countries.

The United Kingdom has taken a largely permissive attitude towards vaping in view of the opportunity presented by the products to encourage current smokers to start consuming their nicotine from harm reduced products. Though regulated, the UK has taken a deliberate, health conscious decision to encourage smokers who are unwilling or unable to quit smoking to rather opt for vaping to satisfy their nicotine craving. This is a sensible position which is intended to encourage smokers to move to a less harmful alternative.

The UK has also refrained from imposing taxes on vaping because it recognises that these products are harm reduced. All taxation is likely to do is impede the development of the industry, increase pricing, and discourage smokers from quitting due to price considerations. This would be a tragic outcome for public health.

Having said that, governments have an obligation, working with the industry, to ensure that vaping products are safe, that young people who do not smoke do not take up vaping as a hobby, and the industry does not engage in unethical marketing practices.

The proposal for the imposition of a vaping tax is a counterproductive move by the Minister of Finance on an industry that is largely fragmented and dominated by small players. Its only certain outcome is the proliferation of illicit products, which will have devastating effects on consumers, as seen with the E-cigarette or Vaping product use-Associated Lung Injuries (EVALI) outbreak in the US. Already, the government is struggling to recover from years of unchecked illicit tobacco, which has robbed the fiscus of much needed revenue, and made smoking far cheaper than it ought to be.