SA inches closer to a vape tax

by | Apr 11, 2022 | News | 0 comments

Every year, when the Minister of Finance presents his annual budget in Parliament, South Africans hold their collective breath in anticipation of increases in the so-called sin taxes.

Moving on up

And the Minister never ceases to disappoint. Year after year we see the usual increases in duties on wine, beer and cigarettes. 2022 added an additional category to the sin tax collective – vaping products.

Government has proposed the introduction of a new tax on vaping products of at least R2.90 per milliliter from 1 January 2023.

The writing has been on the wall for some time. National Treasury published a draft discussion paper in December 2021, followed by a request for public comment in the run-up to the 2022 budget presentation in February. The previous two budget speeches have contained hints of Government’s plans to start taxing electronic nicotine delivery systems (ENDS) and electronic non-nicotine delivery systems (ENNDS), commonly known as e-cigarettes.

This means that vapers will inevitably have to fork out more to enjoy their favourite pastime. Production costs will increase, with the inevitable trickle down to consumers of these products. But are there any positives?

A victim of its own success?

As we’ve said before, the South African vaping market grew by an average of 10% a year over the past decade, with the industry expected to generate 14,000 jobs by 2027, and to contribute in related employment by 13% annually during the same period.

While this growth is phenomenally positive, and exposes more and more people to the healthier alternative to tobacco products, it’s clearly caught the eye of the tax authorities, as a significant opportunity to contribute to the government tax coffers.

There’s always a silver lining

But as with everything, there are two sides to the story. Taxes are a fact of life, and necessary for any economy to flourish. The fact that eyes are now turning to the vapour industry means that it’s viewed as a serious sector for future economic growth. This in turn opens up potential for investment and the expansion of the industry. Which exposes us to an exponentially greater – and increasing – consumer base.

Takeaway

So while pockets may be harder hit, once we’ve negotiated the initial ‘newness’, the end result will quite possibly be a stronger industry, with vastly improved opportunities for growth. Time will tell. In the meantime, head on over to Vaper’s Corner and check out our products.

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