THE vaping industry has warned that the implementation of the Tobacco Bill could cost thousands of job and see more than R200 million lost in tax revenue for an industry that contributed R2.4 billion to the economy.
The results of a new study commissioned by the Vapour Products Association of SA (VPASA) looked into the economic impact the industry has in terms of gross value added (GVA) and its contribution to the gross domestic product (GDP), tax revenue and employment.
Earlier this year, the government wanted to reignite the Control of Tobacco Products and Electronic Delivery Systems Bill which was first tabled in 2018.
The bill seeks to introduce several regulations including prohibiting smoking in some public and enclosed areas where children are present.
It is also aimed at regulating the use, marketing and sale of e-cigarettes or vapes, whose products are said to have operated in a legislative vacuum.
According to the study, the vaping industry contributed R2.4bn, in GVA, to the economy, employed as many as 9 500 people either directly or indirectly and paid R710m in taxes in 2019.
Currently, more than 350 000 South Africans use vapour products and in 2019, those sales amounted to R1.2bn.
The department of health’s spokesperson, Foster Mohale said there was no date set as yet for when the bill would return to Parliament.
“There are many structures and forums involved before we get to that, finalizing the the Socio-Economic Impact Assessment Systems (SEIAS) for the Presidency by end of September if certification if certification is received,” he said.
“Then it will have to go through the Forum of South African Directors-General (FOSAD), then relevant technical committees and cabinet.”
NKC African Economics’ Cobus de Hart, who led the study, said: “The vapour products industry supports GDP and jobs throughout its supply chain.
“Its total gross value-added contribution to GDP is R2.49bn, with R710m in tax payments made in 2019.
“The government would be remiss not to take this into account as it looks to revive the country’s economy after the hard-hitting impacts of the Covid-19 pandemic.”
Chief executive of VPASA Asanda Gcoyi said the industry’s contribution to the economy could not be overlooked, particularly, in the post-pandemic era.
“The most significant contribution the vapour industry can make towards a post-Covid-19 recovery is enabling entrepreneurship and job creation,” she said.
“This study demonstrates the significant contribution that the industry is already making to that recovery as well as the increasing size of the economic opportunity for South Africa.”
However, the study has warned that the enactment of the Tobacco Bill would have a negative impact on the industry.
Gcoyi said the regulations in the bill that seek to classify their products in the same category as tobacco products were inappropriate.
The study found that the introduction of the bill could see a reduction in sales of vapour products of more than 34% which will affect thousands of jobs in the industry’s value chains.
The decline in sales is said to lead to the further loss of the industry to the GDP of about R557.1m, an estimated 2 300 jobs could be lost while tax revenue would decline by R206m.
“This will be a tragic outcome, given that combustible tobacco and the thousands of chemicals released while smoking is what leads to an estimated 44 000 premature deaths annually in South Africa.
“In a country where both health and finances are now even more of a concern than ever before, any industry that encourages harm reduction and economic growth should be embraced with open arms,” she said.