REEP presents to government committee on excise taxes on tobacco and e-cigarettes

24 Nov 2022
24 Nov 2022

Each year the Select Committee on Finance engages with members of the public on aspects of the Tax Laws Amendment Bill, the Tax Administration Laws Amendment Bill and the Rates Bill. The Select Committee is comprised of members of the National Council of Provinces from different political parties. This year the focus was primarily on the taxation of e-cigarettes. In February 2022, the Minister of Finance indicated that the government wants to implement an excise tax on these products, after the National Treasury published a policy paper, which set out the basic rationale and principles for such a tax.

The meeting of the Select Committee follows a public consultation with National Treasury in September 2022, where the various stakeholders submitted their responses to the Treasury’s proposals. REEP submitted written and oral comments at that meeting, which we reported on in the September 2022 newsletter.

It was extremely gratifying to see the public health community speaking with one voice in their presentations to the Select Committee. Groups that spoke to the Committee include the SA Medical Research Council, the National Council Against Smoking, the Tobacco, Alcohol and Gambling Advisory, Advocacy and Action Group (TAG), the Department of Health, the Cancer Association of South Africa, and REEP.

In short, the tobacco-control community argued the following regarding the excise tax on e-cigarettes:

  • We agree with the National Treasury that the excise tax should be levied as a specific tax per millilitre of e-liquid, irrespective of nicotine content;
  • Whereas the National Treasury suggests a rate of R2.90 per millilitre, we believe that a more appropriate rate would be at least R5.00 per millilitre;
  • To deter young people from purchasing disposable e-cigarettes, which contain a limited volume of e-liquid, and which would thus be subject to a very small amount of tax, we propose that National Treasury implements a minimum floor tax of R50 per unit.

REEP also indicated its concern about the scale of illicit trade in the regular cigarette market. However, illicit trade in tobacco products is primarily a criminal issue, not a tax issue. We indicated our appreciation to the National Treasury for increasing the excise tax on regular cigarettes in the past few years, despite strong industry lobbying and opposition, but we believe that the Treasury could have been bolder in their tax increases. The fact that SARS has placed Gold Leaf Tobacco Corporation (GLTC) under curatorship because of GLTC’s involvement in illicit trade is a very positive move. Increasing the excise tax and implementing stronger measures against illicit trade should go hand in hand.

REEP’s submission to the Select Committee on Finance can be found here.