Taxes on e-cigarettes: South Africa must strike a balance between economic arguments and health concerns

The 21st century has seen a massive expansion in the ways that people can consume tobacco and nicotine. Innovative new products include electronic nicotine delivery systems (“ENDS” or e-cigarettes) and heat-not-burn (HnB) products.

One of the challenges this has thrown up is the tax rates on these products.

Combustible tobacco products like cigarettes and loose tobacco are generally taxed at similar rates since the harmful behaviour tied to these products – inhaling tobacco toxins released by burning – is the same. But e-cigarettes don’t contain tobacco and HnB devices do not burn tobacco. Nevertheless, they contain nicotine, which is addictive.

Given their differences to combustible tobacco, applying similar tax rates might not be appropriate.

Economists and health experts have different, and sometimes conflicting, views on how tax rates should be determined for nicotine products.

Economists tend to value economic outcomes and individual liberty. They generally rely on economic theory that