Cape Town – South Africa’s proposed Tobacco Products and Electronic Delivery Systems Control Bill (TPEDSC Bill) poses a significant threat to the burgeoning vaping industry, potentially leading to thousands of job losses and a substantial reduction in its economic contribution. A report prepared by Oxford Economics Africa for the Vapour Products Association of South Africa (VPASA) in August 2023, titled “Vaping Industry Economic Footprint and Impact of the TPEDSC Bill,” details the dire consequences if the legislation is enacted in its current form.

The report highlights that the vaping industry, in 2022, contributed a total of R2.48 billion to South Africa’s Gross Domestic Product (GDP) and supported approximately 9,500 jobs, including direct, indirect, and induced employment. This economic activity also generated R504 million in tax revenues.

However, the analysis forecasts a severe impact from the TPEDSC Bill, particularly due to the proposed ban on displaying vaping products and the prohibition of certain flavors. The report projects that these measures would lead to a dramatic 78% decline in the sales of legal vaping products, resulting in a R1.95 billion reduction in GDP contribution and the loss of 7,300 jobs.

The study emphasizes that a ban on flavors, a key component of vaping products that helps adult smokers transition away from traditional cigarettes, would disproportionately affect the industry. It suggests that such a ban would likely drive consumers to the illicit market, which is already a significant concern due to the proliferation of unregulated and untaxed products.

The report also touches upon the new excise duty on vaping products, implemented in June 2023, which is expected to further suppress the legal market and inadvertently fuel the illicit trade. This tax is projected to contribute an additional R108 million to the projected decline in GDP and a further 400 job losses.

In total, the combined impact of the excise tax and the TPEDSC Bill’s provisions could wipe out a substantial portion of the vaping industry’s economic footprint. The report concludes with a stark warning that while the bill aims to improve public health, its current design risks undermining legitimate businesses, increasing illicit trade, and failing to achieve its intended health objectives. It implicitly calls for a more nuanced regulatory approach that considers the economic realities and potential for harm reduction.