Reference: Published by Staff Writer, 2 May 2023
New smoking tax hitting South Africa next month
With a flat excise duty rate of R2.90 per milliliter beginning on June 1, 2023, nicotine-substitute solutions, including vaping products, will be subject to taxation.
Excise taxes on tobacco products used in vaping have been discussed for a while; the tax was first mentioned in the 2022 budget address by finance minister Enoch Godongwana.
The Tobacco Product Excise forms have been changed to include vaping items, according to the South African Revenue Service (SARS).
Manufacturers of these goods must, therefore, file their first excise duty account by July 28, 2023, and apply for and receive licenses for their manufacturing locations with SARS before June 1, 2023.
“Special storage warehouses in respect of such products should similarly be licensed with SARS before 1 June 2023,” the taxman advised.
Asanda Gcoyi, the CEO of Vapour Products Association SA (Vpasa), claimed in February of this year that the sector would suffer if an excise tax were imposed on e-cigarettes.
The CEO claimed that the government had not carried out sufficient impact analyses for how the tax would affect an industry worth R1.5 billion in 2022.
According to her, the tax may cause a 22% decrease in sales.
Concern about the tax on vaping stems back to British American Tobacco South Africa’s statement that the proposed charge might cause the price of vape items to more than double at a standing committee on finance in September last year.
In September, Gcoyi predicted that e-liquid consumption would decline by 36% and that the average cost of vape products would rise by 138%. Gcoyi and British American Tobacco both concurred that a high tariff would drive customers to the black market.
The Tobacco Products Control Act and the Medicines Act do not apply to vaping products, which makes them mainly uncontrolled.
Inhaling vaporized liquid solutions that may contain nicotine and other chemicals from a device is known as vaping.
It has become very popular as a substitute for conventional cigarettes and has also become popular among younger generations. In a recent paper, UCT professor Richard van Zyl-Smit examined the vaping practices of more than 5,500 high school pupils from a number of wealthy institutions.
According to the report, more than 25% of matric students use vaping devices. A quarter of respondents said they couldn’t get through a school day without vaping, and over 30% of respondents said they used their vaping device within an hour of waking up.