Guest Column

Vaping tax: A mistake in the making?

2019-03-04 08:54
Could you be influenced by your vaping friends?

Could you be influenced by your vaping friends?

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One can only imagine the number of new taxes that the government will have to think up in the short term to boost its depleted coffers. Is Treasury going to punish South Africans in the pocket for enjoying the odd oily meal or salty chips, asks Thembinkosi Gcoyi.

Tito Mboweni has spoken. Most of us are still trying to figure out what it all means. What we do know is that our economic situation is a mess because of the litany of wrongs visited on our country by a band of thieves, thugs, and gangsters masquerading as our public representatives. 

Broadly, most of us have shrugged off the bad news as the necessary, but bitter medicine we all need to take to resuscitate the dying being.

Less bitter, but mystifying is the potential introduction of a tax on vaping products as mooted in the Budget Review 2019. According to the Review "The use of electronic cigarettes and tobacco heating products has increased in recent years. The government intends to start taxing these products. The National Treasury and the Department of Health will consult on the appropriate mechanisms, structure and timing of the tax." 

READ: Why the tabacco industry wants a 0% tax hike and minimum price for cigarettes

This was probably foreseeable, given recent experience with government as custodian of South Africans' lifestyle choices. However, it raises uncomfortable questions about the government's commitment to sensible, predictable, and science-based policymaking.

At this point, one can only assume that the National Treasury is operating from a position of ignorance about the health implications of vaping. Either that or the government has fallen victim to the fearmongering of the Department of Health which views every lifestyle choice it does not like as a vice to be controlled. 

Readers may be aware that the Department of Health is currently reviewing public comments on the Control of Tobacco Products and Electronic Nicotine Delivery System Bill which was published for comment in May to August 2018. In that bill, the department seeks to control nicotine delivery systems in a similar way to tobacco products. 

The only argument the department advances for its position is that vaping may act as a gateway into smoking. It relies on this argument despite clear findings by Public Health England showing that vaping does not lead to smoking. Nowhere in the purported Socio-Economic Impact Assessment released along with the draft bill does the department cite any credible evidence about the health impact of vaping products.

Quite tellingly, the Socio-Economic Impact Assessment does not even attempt to engage with the overwhelming evidence advanced by leading science institutions globally about vaping being 95% less harmful than combustible tobacco products. Further, the draft bill does not make any effort to counter the overwhelming evidence from countries such as the UK where over one million smokers have switched from smoking to vaping because the latter is less harmful than a combustible product.

READ: To vape or not to vape?

Now enter Treasury with what is likely to be a ham-fisted approach to tax a product that is not deserving of punishment as it cannot be rightly classed as a 'sin' product. If anything, one would have assumed that rational policymaking would have prompted the government to roll out the red carpet to vaping to ensure that it becomes cheaper to reduce the debilitating impact of smoking as well as the adverse externalities attendant to it. 

But no, the National Treasury seems to have succumbed to the scaremongering of the Department of Health to stub out a behaviour that is much healthier than the alternative. Either that or government sees vaping as a potential cash cow to raise revenue wherever possible given the widening budget deficit. 

One can only imagine the number of new taxes that the government will have to think up in the short term to boost its depleted coffers. Is Treasury going to punish South Africans in the pocket for enjoying the odd oily meal or salty chips? After all, these products pose a much larger danger to the health of consumers than vaping, which provides a more significant benefit to society and the state by potentially lowering the incidence of non-communicable diseases. 

ALSO READ: This is how this year's Budget is going to hurt you - from a sugar tax hike to an income tax blow

Rather than rushing to impose taxes and punish those who are switching from conventional smoking to vaping, the Department of Health and National Treasury should first look at regulating the products and their inputs, through uniform standards informed by research and industry norms to ensure that consumers have access to safe products

Thus far, Mboweni has shown himself to be sensible on policy matters. His admonishment of Minister Aaron Motsoaledi in November 2018 for pursuing plain packaging of tobacco products while the country is confronted with a failing health system is the right type of response to the unhealthy habit of policy overreach which has become characteristic of government institutions. It is hoped that in this instance, he will exercise prudence and base his decision on the available scientific evidence rather than the ideological leanings of his officials or those of the Department of Health. 

The advent of legislation on vaping by the Department of Health, coupled with the possible taxation announced by Treasury will merely make the vaping products inaccessible to the majority of smokers who are trying to switch or move away from tobacco. Furthermore, the industry comprises mostly (above 90%) of small and medium businesses in the country employing thousands of South Africans. Their jobs and their families' livelihood are now on the line. These SMMEs will not be able to cater for the rise in costs through both legislation and taxation and will be bound to close shops as was the case in Italy.

Canada and the UK among other countries are now recommending vaping through their Ministries of Health's programmes as one of the scientifically proven, best method to move out of tobacco. Those are countries that have done the research themselves. 

In South Africa, with the legislation and taxation to be proposed, the two ministers are announcing the death of the industry that has to date saved millions of smokers from tobacco around the world. 

- Thembinkosi Gcoyi is the managing director of Frontline Africa Advisory. Follow him on Twitter: @tgcoyi

Disclaimer: News24 encourages freedom of speech and the expression of diverse views. The views of columnists published on News24 are therefore their own and do not necessarily represent the views of News24.

Read more on:    tito mboweni  |  aaron motsoaledi  |  vaping  |  sin tax  |  budget speech 2019  |  tax
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