Opinions differ on how to regulate electronic cigarettes (e-cigarettes). However, dozens of countries are taking action. In Africa, Kenya already taxes these products, and South Africa is preparing to follow. E-cigarettes don’t contain tobacco, which has harmful health effects.
E-cigarettes often contain highly addictive nicotine and have their own negative health risks. Some people use e-cigarettes when they are trying to stop smoking combustible cigarettes.
In the US studies have shown that young non-smokers are taking up e-cigarettes in growing numbers. About 1,3 million adolescents started smoking e-cigarettes between 2017 and 2018. Hospitalisations and deaths as a result of lung injury also rose.
The market for e-cigarettes is expanding with a rapid increase in the number and variety of products being sold. In early 2014, there were already 466 e-cigarette brands.
A study done four years ago in South Africa showed that 2% of adult women and 3% of men were using e-cigarettes. This compared with 7% of adult women and 37% of adult men smoking tobacco.
E-cigarettes are unregulated in the country, yet their marketing and sale is proliferating on online platforms. This suggests that the number of e-cigarette consumers in South Africa is likely to grow in line with global trends.
The country can learn from its experience of implementing tobacco controls. In 1990 the government introduced warnings on cigarette packet labels and banned smoking on public transport. It also raised taxes on cigarettes. Between 1990 and 2012, real excise taxes rose by 522%. Over this period, adult smoking rates dropped from 33% to 20%.
A similar approach should be adopted to deter non-smokers from starting to use e-cigarettes.
How to regulate
E-cigarettes don’t fall under the current Tobacco Products Control Act. Technically, they fall under the Medicines and Related Substances Act of 1965. They are supposed to be registered with the South African Health Products Regulatory Authority and sold by prescription only.
In practice they are not being marketed as a way to stop smoking, but rather as a consumer product. They are sold in kiosks and regular shops.
A new tobacco control bill published by the South African health department suggests regulating e-cigarettes as tobacco products.
There are three possible ways to deal with e-cigarettes: banning them, regulating them and taxing them.
Which avenue to pursue should be based on information about user behaviour and long-term effects on health because different kinds of regulation may have different effects on behaviour.
The banning option: In 2019, e-cigarette sales were banned in 28 countries, among them Brazil and India.
The ban is sometimes based on the concern that reintroducing a nicotine product into the market might contribute to normalising combustible cigarette use. There are also concerns about the role that the tobacco industry is playing in the market. Some cigarette manufacturers, such as British American Tobacco and Altria, are buying stakes in e-cigarette companies.
Banning e-cigarettes may be difficult once demand is established.
Our work at a research unit that looks at using taxes to reduce the use of products has shown that taxation is a very cost efficient strategy to discourage consumption of combustible cigarettes. It also creates a stream of revenue for the government. The same would be true for e-cigarettes. The size of the additional revenue stream would depend on consumption numbers, the tax rate and the level of tax evasion.
South Africa’s national treasury has indicated its intention to tax e-cigarettes, but not yet how and at what level.
Several European and Asian countries and some US states have started taxing e-liquids. The impact on consumption has not yet been quantified. One study focusing on six countries in Europe predicted that a 10% increase in the price of e-cigarettes would lead to a drop in e-cigarette use of 2.7% in the short run and 11.5% in the long run. The only African country to have taxed e-cigarettes is Kenya, which imposes a tax of 3,000 Kenyan shillings (around US$30) per e-cigarette device and 2,500 Kenyan shillings per cartridge.
Taxing the liquids used in e-cigarettes could be based on nicotine content or on a value such as production cost or retail price. The trouble with taxing by nicotine content is that it would require regular laboratory testing of products to detect tax evasion. The most practical option for the South African context may be to base the tax on the volume of e-liquid.
After establishing an efficient tax structure, the next step would be to decide the tax level – one that encourages the desired behaviour. This requires a lot of comparable information about products. In the absence of its own database, a country like South Africa could rather follow the example of other countries that tax e-liquid volumes.
Regulation: Before e-cigarettes can be regulated they need to be included under the Tobacco Control Act. This would make them open to regulatory intervention.
Regulations could include: a ban on smoking in public spaces, a ban on sales to minors, banning advertising (including promotion, product placement and sponsorship) and including health warnings on packaging.
An additional option would be to regulate the characteristics of products. The European Union’s approach has been to limit the nicotine concentration in e-liquids and the volume of an e-liquid refill and disposable cartridges. This would prevent high-nicotine products from entering the market.
South Africa’s National Department of Health is considering the draft bill on tobacco products and electronic delivery systems. This would include e-cigarettes as tobacco products, opening the door to being able to regulate and tax them.
This should become law as soon as possible to prevent a rise in demand. And it should be accompanied by a clear policy from the National Treasury on the structure and level of taxing e-cigarettes.
Delaying adoption of these policies is a missed opportunity to tackle the problem while it is still manageable.
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