Abstract
E-cigarettes have been advertised as a technological advancement, which is comparable to the smart phone of smoking devices. These products are rapidly revolutionising industries and have a strong market presence. As e-cigarettes have grown in global markets, there have been global recommendations to tax these products in an attempt to protect public health, as well as to reinforce any shortfalls in revenue generation or regulatory provisions.
Following global recommendations, the South African government initially announced its plan to start taxing e-cigarettes in South Africa with effect from 2021. These plans have been delayed and are now proposed to come into effect from 1 January 2023. The proposal aims to levy a specific excise tax of R2,90 per millilitres on all Electronic Nicotine Delivery Systems (ENDS) and Electronic Non-Nicotine Delivery Systems e-liquids (ENNDS).
As there are no firm global tax policies governing the tax on e-cigarettes, the purpose of this study is to determine whether the proposal to tax e-cigarettes in South Africa is feasible. This will be achieved by performing a functional comparative analysis of the tax legislation, laws, and regulations adopted in Kenya, Russia, Korea, Italy, and Latvia against the proposals set forward by National Treasury in South Africa.
The findings of this study have discovered the tax policy recommended by National Treasury for the tax on e-cigarettes to be a sound policy. There are recommendations set forward in this to improve the proposed policy. The main recommendations include referring to e-cigarettes by its technical terms in the legislation and the inclusion and modifications to the definitions in the Customs and Excise Act.
Keywords:
Electronic cigarette (e-cigarette); Electronic nicotine delivery systems (ENDS); Electronic non-nicotine delivery systems (ENNDS); Tax; Excise tax