South Africa’s Vape Tax Surge: Price Hikes, Industry Concerns

South Africa’s Vape Tax Surge. As of June 1, 2023, South Africa implemented a new excise duty on vaping products, imposing a flat rate of R2.90 per milliliter on nicotine and nicotine-substitute solutions.

South Africa’s Vape Tax Surge the cost of e-liquids, with consumers now paying substantially more for their vaping products.

For instance, a 120ml bottle of e-liquid previously priced at R250 now incurs an additional tax of R400.20 (including VAT), bringing the total cost to R650.20—a 160% increase.

This substantial price hike has raised concerns among industry stakeholders about the potential consequences for both consumers and businesses.

Critics argue that the elevated costs may drive consumers toward higher-nicotine products or even back to traditional cigarettes, undermining public health objectives. Additionally, there is apprehension that the increased prices could push consumers toward illicit markets, where products may not adhere to safety standards.

The financial strain on businesses is also evident. With reports indicating that up to 50% of vape retailers could face closure by the end of the year due to decreased demand.

Some retailers have already shut down operations, unable to sustain profitability under the new tax regime.

While the government aims to regulate the vaping industry and deter usage through this taxation. The long-term effects on consumer behavior and the market landscape remain uncertain. As the industry adapts to these changes, stakeholders continue to debate the balance between public health objectives and economic sustainability.

In the 2025 Budget Speech. Finance Minister Enoch Godongwana announced a 4.75% increase in excise duties on electronic nicotine delivery systems (ENDS). Commonly known as vaping products.

This adjustment raises the excise duty from R3.04 to R3.18 per milliliter of vaping liquid.

The government aims to discourage vaping, especially among youth, by increasing costs. A University of Cape Town study. Revealed that nearly 30% of Grade 12 learners are active vapers, with some schools reporting rates as high as 46%.

Parents and health experts have expressed support for the tax increase, hoping it will deter teenage vaping. Nicotine use during adolescence can harm brain development, affecting learning, memory, and attention, and may lead to traditional cigarette smoking.

However, industry stakeholders are concerned that higher taxes could push consumers toward illicit markets. Where products may not meet safety standards. They also fear that increased prices could lead to a significant decrease in demand. Potentially resulting in the closure of local manufacturers and retailers.

The government maintains that the excise duty increase is necessary to regulate the growing vaping market and generate revenue to support public health initiatives. As the implementation date approaches, it remains to be seen how consumers and the industry will adapt to these changes.