E-cigarette taxation is necessary because e-cigarette use is harmful to health and increases the strain on the health care system and public purse.
During his SONA speech the president painted a bleak picture of an economy in distress. Public finances are under severe pressure, youth unemployment is unacceptably high and continues to rise - and SOEs like SAA and Eskom continue to be a drain on the public purse.
In October 2019 the Minister of Finance spoke of tax deficits, with Treasury collecting R53 billion less than it had projected. In his much anticipated Budget Speech, Tito Mboweni is expected to outline measures to begin to turn this around. In 2019, R717 billion was allocated to health care services, a figure that has increased each year since 1994. Whilst the prioritization of public health with the provision of treatment is to be applauded, the allocation for health will have to continue to increase if tobacco consumption continues along the current trajectory. Tobacco-related harm costs R59 billion per annum, and will increase as the numbers of smokers increases.
One of the most effective ways to reduce tobacco consumption is to increase the price of tobacco products through tax increases. They are a win for public health and for the public purse. Tax increases reduce use of harmful products, they reduce diseases related to these products and in this way, reduce the pressure on the health budget, whilst at the same time providing additional revenue to the fiscus.
For over a decade now, electronic cigarettes, although widely available in South Africa, have been untaxed. In 2016 2,5% of the adult population in SA used e-cigarettes and this figure is expected have increased in the last few years. At today’s population this equates to about 1 million people using e-cigarettes.
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