Critical analysis of the taxation of electronic cigarettes in South Africa

Dhliwayo, Hlulane Elijah

Critical analysis of the taxation of electronic cigarettes in South Africa

Thesis / Dissertation

2026

Publisher

University of Cape Town

Department

Department of Finance and Tax

Faculty

Faculty of Commerce

Abstract

This dissertation analysed the impact and challenges of taxing electronic cigarettes in the current regulatory environment. This study examined the motivations behind implementing such taxation, the potential economic implications, and the effectiveness of existing policies in curbing e-cigarette use. Through a comprehensive analysis of relevant literature, case studies, and empirical data, this research aimed to provide insights into the feasibility, efficacy, and potential consequences of the taxation system for e-cigarettes. Drawing upon relevant literature and policy documents, including the National Treasury's discussion paper, this research explores various international approaches to e-cigarette taxation and regulation to provide a comparative perspective. A key aspect of this analysis involves a critical evaluation of the application of the “precautionary principle” as advocated by the World Health Organization in the context of e-cigarette taxation policy. Furthermore, this study also considered the views and perceptions of different stakeholders, including e-cigarette users, public health organizations, industry representatives, and government officials. Understanding their perspectives aims to provide a balanced assessment of the potential benefits and drawbacks of implementing a taxation system for e- cigarettes. One of the critical advantages of taxing e-cigarettes is the potential to generate revenue that can be used to fund public health initiatives or education programs. However, there are concerns about the possible unintended consequences of taxation, such as driving users towards cheaper and potentially more harmful alternatives or creating a black market for unregulated products. To mitigate these risks, policymakers should consider implementing a comprehensive approach that combines taxation with other measures, such as public education campaigns, stricter marketing regulations, and ongoing market monitoring. By considering the experiences and lessons learned from countries that have already implemented taxation on e-cigarettes, policymakers can design effective and evidence-based policies that promote both public health and revenue generation. The findings of this study contribute to understanding how taxation can influence consumer behaviour, public health, and revenue generation in the context of e-cigarettes. Overall, this research provided a thorough analysis of the impact of taxation on e-cigarettes, considering its feasibility, efficacy, and potential consequences. By shedding light on this topic, it seeks to contribute to the ongoing discussion surrounding the regulation of e-cigarettes and inform evidence-based policymaking.