In June 2023, South Africa will impose a flat excise duty of R2.90/ml on nicotine substitutes, including vaping products. This tax has been anticipated since finance minister Enoch Godongwana announced it in his 2022 budget speech. Vaping manufacturers and special storage warehouses must obtain licenses from the South African Revenue Service (SARS) by June 1, 2023.
Asanda Gcoyi, CEO of Vapour Products Association SA, fears that this tax could harm the R1.5 billion industry by causing a 22% drop in sales. The tax might also drive consumers to the illicit market, as vaping product prices could more than double. Currently, vaping is largely unregulated, but new legislation is in progress.
Vaping’s popularity as a cigarette alternative has grown, especially among youth. A recent study by Professor Richard van Zyl-Smit at the University of Cape Town found that over 25% of high school seniors use vaping devices. This new tax aims to regulate the industry, but the potential consequences remain uncertain.
Q1. Define the term demerit good.
Q2. Explain why vaping is a demerit good.
Q3. Analyse the impact of the new excise duty on the market for vapes in South Africa.
Q4. Discuss whether taxation is an effective solution for reducing the consumption of vapes.
Click here for the source article
Luxembourg has introduced a new solar subsidy scheme designed to accelerate the transition to renewable…
China ended 2025 with the largest trade surplus ever recorded, underscoring how resilient its export-led…
Mexico has announced a 156% tariff on imported sugar, a major protectionist move aimed at…
New York City has a new mayor, and his signature promise fits on a protest…
The Philippines has announced that it will reopen rice imports in January 2026, allowing 300,000…
McDonald’s latest quarterly results reveal how even one of the world’s most iconic brands is…