South Africa’s vaping tax: A new black market in the making?

Johannesburg – South Africa’s excise duties on vaping products are raising concerns that high taxes could fuel illicit trade, following warnings from industry stakeholders that the country risks repeating the experience of its illegal cigarette market.

According to Daily Investor, the concerns were raised in submissions considered by the National Treasury and the South African Revenue Service (SARS) in their response to public comments on the 2026 Draft Tax Bills.

The government introduced an excise duty of R2.90 per millilitre on nicotine and non-nicotine vaping liquids in June 2023. The levy increased to R3.29 per millilitre in the February 2026 Budget, prompting industry representatives to argue that the tax could make legal products less competitive and encourage black-market sales.

South Africa’s cigarette market offers a warning of the potential consequences. According to Reuters, British American Tobacco South Africa plans to close its Heidelberg manufacturing plant by the end of 2026, citing the growth of illicit cigarette sales.

The company estimates that illegal products account for approximately 75% of South Africa’s cigarette market. Its facility was operating at just 35% of capacity, threatening about 230 jobs.

Wider economic implications

The wider economic implications were highlighted by Business Day, which reported that illicit trade extends beyond tobacco into sectors including alcohol, fuel, clothing and pharmaceuticals. Estimates of the illicit economy vary, with research commissioned by the Consumer Goods Council of South Africa putting its value at R280 billion across 12 sectors.

Industry stakeholders have urged the government to reconsider vaping taxes and adopt a risk-based approach that distinguishes vaping products from combustible cigarettes. However, the debate also involves public health concerns.

The Cancer Association of South Africa has warned against portraying vaping as harmless. Its Tobacco Control Programme Coordinator, Minenhle Dlamini, said: “These risks include nicotine addiction, lung damage and the increased likelihood of moving onto traditional tobacco products,” according to Daily Investor.

The challenge for policymakers is to balance public health objectives and tax collection with effective enforcement against illicit products. Without appropriate regulation and enforcement, industry representatives warn that South Africa’s expanding vaping market could face the same pressures that have undermined its legal cigarette industry.