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More than 350,000 South Africans use vape products.
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Asanda Gcoyi, Vapor Products Association of South Africa (VPASA) chief executive.
In South Africa, where there are an estimated eight million smokers and a growing number of them are turning to e-cigarettes to quit smoking, a vaping industry is quickly emerging.
Since vaping is not yet regulated in Africa’s most industrialized country, the government is consulting on how to proceed, but already imposed a tax rate that takes effect in January 2023. A lively debate is ongoing.
“The Vapor Products Association of South Africa [VPASA] has been vocal about wanting the industry to be regulated, but not in the manner in which the South African Department of Health currently seeks to do it,” VPASA chief executive, Asanda Gcoyi, told Tobacco Asia. “We would like to see South African legislation that allows consumers to choose potentially less harmful alternatives to cigarettes. Insisting on categorizing tobacco and electronic vapor products under one umbrella gives the impression that they are equally harmful to one’s health.”
The debate ignited in 2018 when the government started drafting the Control of Tobacco Products and Electronic Nicotine Delivery Systems Bill. It intensified from December 15, 2021 with the government’s release of a discussion paper on electronic nicotine and non-nicotine delivery systems (ENDS) regulation. Stakeholders were called to make suggestions on how they think the sector can be regulated as well as how it can be taxed. The call for contributions ended on January 25, 2022 but given VPASA’s arguments and other stakeholders, the industry looks set to be in for the long haul.
A 2021 VPASA-commissioned study into the economic benefits of the sector established that its total gross value-added contribution to the gross domestic product was SAR2.49 billion (US$154 million) with tax payments amounting to SAR710 million in 2019. More than 350,000 South Africans use vapor products and the industry employs 9,500 people, the research found.
Also, a study conducted by Canback, an international consultancy, said South Africa’s vaping market grew by an average of 10% a year over the past decade, and the growing demand for vaping products will generate more than 14,000 jobs by 2027, with growth in related employment of 13% annually during the same period.
The government says a legal vacuum exists as e-cigarettes are not covered by the Tobacco Products Control Act or the Medicines Act. That is why it initiated the drafting of the Control of Tobacco Products and Electronic Nicotine Delivery Systems Bill four years ago. It will seek to regulate the use, marketing, and sale of e-cigarettes. The proposed law has not been brought to parliament for debate and possible adoption. However, ahead of the approval of the law, finance minister Enoch Godongwana said on February 23 that the government will introduce a new flat tax of SAR2.90 (US$0.18) on both nicotine and non-nicotine vaping products from January 2023.
Gcoyi has some concerns over the proposed excise tax, among them the haste with which government seems intent to introduce it. In addition, she is concerned over what she describes as, “the lack of modelling of the taxes’ impact on vaping behavior, including how many people are expected to be discouraged from vaping and how many smokers are likely to revert to smoking if vaping becomes unaffordable.
“The lack of credible, verifiable evidence of how this tax is going to affect the industry’s ability to compete with the traditional tobacco industry; the lack of credible data from the government to back up its contention that the tax will deter youth vaping,” said Gcoyi. “This is difficult to quantify in the absence of clear information about the current state of youth vaping in the country. We believe it is premature to be talking about specific tax rates when the very rationale for such a tax is suspect as far as we are concerned.”
Tobacco products in South Africa attract some of the world’s highest taxes, about 40%. According to the government, the market for ENDS is still at its infancy in many developing countries, including South Africa, but it sees it growing.
“In other markets, the growth in the consumption of these products has been observed amongst the youth and has raised concerns on its impact on youth initiation of smoking and tobacco use,” said the government in a statement. “Furthermore, there are concerns regarding their potential to under-mine global tobacco control efforts, and public health in general, considering that these products are not harmless,” it said.
However, the industry says by lumping traditional cigarettes and vapes together in terms of potential health impact, the government goes against science. Research by reputable international organizations such as Public Health England, the Royal College of Physicians, the US Academy of Sciences, Cancer Research UK, and many others show that vaping is up to 95% less harmful than smoking.
The Oxford Nicotine and Tobacco Research Journal noted that “e-cigarettes are a source of second-hand exposure to nicotine but not to combustion toxicants”, while there is available scientific research that “second-hand cigarette smoke, especially the smoke generated when a user is holding a lit cigarette, has been associated with cancer and heart disease in bystanders.”
The Free Market Foundation of South Africa is worried over what it says is the government’s move towards “heavily” regulating ENDS given that vaping decreases a smoker’s risk profile of tobacco-related diseases by 98%. Its chairperson, Gail Day, told Tobacco Asia that instead of embracing vaping and e-cigarettes as tobacco harm reduction products, the government’s discussion paper erroneously categorizes vaping products as being equivalent to tobacco products and nicotine.
“Had government taken the stance of embracing these innovative solutions, then smokers would have cheaper and healthier alternatives available to help quit smoking,” Day said. “Although the government wants to use tax revenue to purportedly combat smoking, the tax on vaping products will have the opposite effect – driving up the costs of vaping and [disincentivizing] smokers from taking up alternatives and keeps them smoking.”
Cigarette taxes, Day said, were an injustice which would be furthered by vaping taxes planned for January 2023. “This is an inequality before the law that is justified by the extra health costs of smokers without accounting for smokers who get their healthcare provided for privately on top of paying income taxes like everyone else,” she argued.
But, Laura Rossouw, a health economist at the School of Economics and Finance at the University of Witwatersrand in South Africa, writing in The Conversation on February 11, 2020, said taxation and warnings have a history of helping in reducing smoking in the country.
In 1990, she recalled, the government introduced warnings on cigarette packet labels and banned smoking on public transport. It also raised taxes on cigarettes. Between 1990 and 2012, real excise taxes rose by 522%. Over the same period, adult smoking rates dropped from 33% to 20%.
“A similar approach should be adopted to deter non-smokers from starting to use e-cigarettes,” she posited. “Our work at a research unit that looks at using taxes to reduce the use of products has shown that taxation is a very cost-efficient strategy to discourage consumption of combustible cigarettes. It also creates a stream of revenue for the government. The same would be true for e-cigarettes.”
The future of vaping in South Africa will depend on the regulatory framework that the government will adopt, Gcoyi said, warning that one that applies the same restrictions as envisaged for smoking will destroy the industry.
“Essentially it will mean smokers are not provided with the correct level of information about the important differences between vaping and smoking, thus depriving them of the information required to make an informed choice about whether to vape or smoke,” she said.
“Ultimately, such an outcome will assure the tobacco industry of a position in the nicotine market, thus entrenching its dominance in the long term. On the other hand, a clear distinction between vaping and smoking in regulation will allow the industry to communicate with smokers and of-fer them a harm-reduced alternative to smoking. In the long term, this may displace smoking as the primary form of nicotine consumption and lower smoking related diseases overall. This would be a commendable outcome given the costs imposed on the health system by smoking.”