South Africa’s vaping tax: A new black market in the making?

South Africa's excise duties on vaping products are raising concerns that high taxes could fuel illicit trade, following warnings from industry stakeholders that the country risks repeating the experience of its illegal cigarette market. The government introduced an excise duty of R2.90 per millilitre on nicotine and non-nicotine vaping liquids in June 2023, which increased to R3.29 per millilitre in the February 2026 Budget. Industry representatives argue that this tax could make legal products less competitive and encourage black-market sales. South Africa's cigarette market offers a warning: British American Tobacco South Africa plans to close its Heidelberg manufacturing plant by the end of 2026, citing the growth of illicit cigarette sales, which account for approximately 75% of the market. The wider economic implications extend beyond tobacco into sectors including alcohol, fuel, clothing and pharmaceuticals, with the illicit economy valued at R280 billion across 12 sectors. Industry stakeholders have urged the government to reconsider vaping taxes and adopt a risk-based approach that distinguishes vaping products from combustible cigarettes. However, public health concerns remain, with the Cancer Association of South Africa warning against portraying vaping as harmless, citing risks such as nicotine addiction, lung damage, and the increased likelihood of moving onto traditional tobacco products. The challenge for policymakers is to balance public health objectives and tax collection with effective enforcement against illicit products.

(Source：African Insider)