The pitfalls of raising taxes on vaping – a closer look


Michael Landl | Director | World Vapers’ Alliance | mail me |









Martin van Staden | Head | Policy | Free Market Foundation | mail me |

As more people choose vaping as an alternative to smoking, discussions surrounding its regulation and taxation have become hot-button issues worldwide, and South Africa is no exception. One prevalent topic is the idea of raising taxes on vaping products.

While the intention might be to address public health concerns and generate state revenue, it is essential to critically examine the potential pitfalls of such a move.

In a recent op-ed published in The Conversation, Professors Nicole Vellios and Corne van Walbeek articulated reservations regarding the South African government’s prevailing tax proposal. In the article, they advocate for a minimum excise tax on all vaping products and to increase the excise tax on e-cigarettes by the inflation rate, plus a pre-announced additional percentage.

Unintended consequences

An automatic further tax increase would inadvertently drive vapers back to smoking or into the unregulated illicit market. For those who have successfully quit smoking through vaping, increased taxes may pose a financial burden that pushes them back to smoking.

Such unintended consequences could exacerbate smoking-related health issues and hinder overall public health goals.

There is plenty of evidence that vaping and cigarettes are substitute products. On the one hand this is positive, because vaping has been shown to be significantly less harmful than smoking. Consumers choosing the less harmful substitute is something to be celebrated. On the other hand, because these are substitute products, we can reasonably expect that more stringent regulations and tax increases on vaping products will lead to higher smoking rates.

Additionally, higher prices due to such a drastic tax increase disproportionately affect low-income consumers. Many smokers turn to vaping as an affordable alternative to cigarettes. By increasing the cost of vaping, these individuals may face barriers to accessing harm reduction options, perpetuating health inequities and hindering their ability to make healthier choices.

An international consumer survey shows that increased taxation won’t change the behaviour of those who can afford higher prices as they would pay the additional price for the product. The worrying aspect is that vaping would become a luxury good for many, and almost a third would be pushed to the illicit market. We can expect this number to be significantly higher in South Africa, where the public has less disposable income than their first-world counterparts.

The potential consequences

While the intention behind raising taxes on vaping products may be well-intentioned, it is crucial to consider the potential consequences and unintended effects on public health and consumers.

Vaping has shown promise as a harm-reduction tool for smokers looking to quit smoking. Imposing excessive taxes could undermine this potential and discourage individuals from switching to a less harmful alternative. While we concur with Professors Vellios and Van Walbeek that the present tax structure might not effectively combat youth vaping, we are convinced that elevating taxes further will not resolve the issue either.

An often-ignored explanation for adolescent vaping uptake is a “common liability.” In other words, adolescents who are likely to vape are also likely to smoke – e.g., because of personality traits, genetic predisposition, or social and environmental factors.

If safeguarding the youth is truly the goal, advocating for enhanced education, healthcare, and economic conditions becomes paramount. In South Africa in particular, addressing the disastrous levels of unemployment must be the first step in securing better health outcomes for the youth. Unfortunately, achieving these ambitions proves intricate, compelling numerous politicians to opt for headline-grabbing yet ineffectual policies that disregard tangible outcomes.

The Tobacco Products and Electronic Delivery Systems Control Bill, currently being shepherded through Parliament, is another example of government taking a sledgehammer to a problem requiring a scalpel. It proposes to bring cigarettes and vaping devices largely under the same regulatory dispensation, defining the latter as a product that is “related” or “relevant” to tobacco products.

Where one may no longer smoke, one may also no longer vape. The strict regulations the bill requires government to adopt to combat smoking will also often, by necessary implication, apply to vaping.

The bill’s usefulness and propriety in relation to smoking is already highly doubtful, but its treatment of vaping as an essentially identical phenomenon is a threat to sound policy- and law-making.

In conclusion

Instead of resorting to blanket taxation or regulation, policymakers should approach vaping regulation with a balanced perspective, considering evidence-based harm reduction strategies and consumer input. Supporting access to safer alternatives and promoting education on vaping’s role in reducing smoking rates can lead to more effective public health outcomes.

To realise the harm reduction potential of vaping, taxation should be proportional to the risk of these products. Less harmful products such as vaping must be taxed lower than the most harmful product, namely cigarettes, to keep an incentive for smokers to switch.

Affordable access to vaping products is essential if we want to reduce the harm caused by smoking. Ultimately, striking the right balance between taxation and harm reduction is essential for fostering a healthier future for smokers and the broader public alike.




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