Illicit vapes threaten tax revenue as SA’s market surges
South Africa's rapidly growing vape market is threatened by illicit products, impacting tax revenue and legitimate businesses like British American Tobacco.Summary
The illicit vape market in South Africa poses a significant threat to government tax revenue as the country’s legal vape market experiences rapid growth, projected to increase from $167.6m in 2024 to $410.2m by 2030. Despite the introduction of excise duties on vaping products in June 2023, illegal operators bypass regulations, offering cheaper alternatives and depriving the government of funds. British American Tobacco (BAT) reports that these illicit products are challenging its vapour business and hindering its ‘Better Tomorrow’ strategy, which aims to reduce cigarette use by encouraging a switch to alternatives. The problem is exacerbated by weak enforcement, high taxes, and the ease of online sales, with the illicit market accounting for a substantial portion of global vapour product sales. BAT is increasing efforts to combat illicit trade through collaboration with governments and law enforcement, but the issue is also impacting its cigarette business, leading to potential plant closures and reliance on imports due to the dominance of illegal cigarettes in the South African market.
(Source：Business Day)
