SA’s key industry association for e-cigarettes has called on the Treasury to delay implementing a new excise tax on its products until the government has finalised a regulatory framework for the sector.
The Treasury plans to impose excise duty of R2.90/ml for both nicotine and nonnicotine electronic delivery devices from June this year, despite the absence of controls on these products. The Tobacco Products and Electronic Delivery Systems Control Bill seeks to bring e-cigarettes into the regulatory fold for the first time and is before parliament.
Vapour Products Association of SA (Vpasa) CEO Asanda Gcoyi said the imposition of the excise tax on e-cigarettes, set out in the Taxation Laws Amendment Act gazetted in January, will have a devastating effect on the industry.
The government failed to do a socioeconomic impact assessment of the effects of the excise tax, which an industry-commissioned study found would lead to a 22% decline in sales, she said. The study estimated sales of e-cigarettes amounted to R1.5bn in 2020, and that a 22% drop in sales could force the industry to shed 2,250 jobs.
“That’s a lot in a small industry,” Gcoyi said.
The tobacco bill proposes greater restrictions on smoking in public places, introduces plain packaging and picture warnings, bans vending machine sales, prohibits point-of-sale advertising and regulates e-cigarettes and other new-generation products in much the same way as tobacco.
Gcoyi said the department of health is pushing for parliament to complete its work on the bill by September, ahead of a key World Health Organisation meeting on the Framework Convention on Tobacco Control, to which SA is a signatory.
The bill has been classified by parliament as a section 76 bill, which means it must be considered by both houses of parliament — the National Assembly and the National Council of Provinces — which she conceded will make processing the bill within six months a challenge.
MPs on parliament’s portfolio committee on health have yet to start work on the proposed new tobacco laws, which they are not expected to do until they have finalised their deliberations on the National Health Insurance (NHI) Bill. The committee has yet to receive final input from the state law adviser and parliament’s legal services on the bill, which it requires to make changes. Once MPs are done with the NHI Bill, it will head to the National Assembly for a second reading debate, and will then be referred to the National Council of Provinces for concurrence.
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