Move to tax e-cigarettes welcomed by anti-smoking organisation
CAPE TOWN – The National Council of Smoking (NCAS) on Thursday welcomed Finance Minister Tito Mboweni’s announcement when he delivered the Budget 2020 on Wednesday that the government would move to tax e-cigarettes.
For more than a decade, e-cigarette usage has been unregulated and untaxed in the country, according to NCAS. An estimated one million South Africans now use e-cigarettes, a number that continues to grow.
When delivering the 2020 National Budget Policy Statement, Mboweni said in line with Department of Health policy the government would start taxing heated tobacco products such as hookah or “hubbly bubbly”. “The rate will be set at 75 per cent of the rate of cigarettes. Electronic cigarettes, or so-called vapes, will be taxed from 2021.”
NCAS said in a statement that e-cigarettes were linked to severe health conditions including cardiovascular and respiratory diseases, chest pains, ulcers in the mouth, asthma and a high risk of strokes. Taxing these products would offset the cost of this harm which is incurred by the health system and paid for by the taxpayer.
NCAS executive director, Savera Kalideen said this tax would bring South Africa in line with countries such as Kenya, which already have a tax on e-cigarettes. “It is also in line with recommendations from the World Health Organisation as an effective way to reduce health harm. It is also in line with the World Bank’s recommendations to use tax on tobacco to reduce the health burden and bring in revenue to the fiscus.”
But while NCAS applauded the move to introduce tax, the council expressed disappointment at Mboweni’s insignificant increase of R0.74 per packet of 20 cigarettes. The increase brings the excise tax to R17.40 per packet and people who smoke nine cigarettes on average a day will only spend an additional R1212 for the year.
“This is simply not enough to get people to think twice about their smoking behavior and the risk to themselves and others through harmful second-hand smoke. The 2020 tax increase is even lower than the 2019 increase of R1.14 per packet and the 2018 increase of R1.22 per packet,” said NCAS.
The anti-smoking council said more than 8 million South Africans smoked and if this number was not reduced by higher taxes then the burden on the health system and the future National Health Insurance (NHI), as well as public finances would not be sustainable.
Tobacco-related harm currently costs the country R59 billion per annum while we earn less than R12 billion in excise taxes.
The World Health Organisation recommends that countries tax e-cigarettes to make them more expensive, particularly for youth, as this will reduce use. The World Bank recommends that countries impose a tax on the e-cigarette devices as well as on the e-liquids.
They suggest that a specific tax per milliliter be applied to both the nicotine and non-nicotine e-cigarette liquids, because evidence shows that non-nicotine e-liquids also carry health harms. They also recommend an ad valorem tax which is a tax based on the value or price of the e-cigarette device.
There was plenty of room for Minister Tito Mboweni to increase the taxes and fund the shortfall in the health burden that the product causes, said the NCAS.