Raising tobacco taxes is a win-win for governments

Technical experts from the Ministry of Finance and Planning, Revenue Authorities, Ministries of Health in Tanzania Mainland and Zanzibar and WHO Country Office met to deep dive into tobacco taxation – the most effective and most cost-effective measure to reduce tobacco consumption.

Through technical assistance from the WHO Framework Convention on Tobacco Control (FCTC) Knowledge Hub, the experts were oriented on technical concepts related to tobacco taxation and exposed to hands-on practical sessions on the Tobacco Excise Tax Simulation Model (TETSiM) – a tax simulation model designed by the Research Unit on the Economics of Excisable Products (REEP) based at the University of Cape Town in South Africa.

The TETSiM model is a simple, excel based model, which is used to predict the likely fiscal and public health impacts of a change in the excise tax structure and/or the level of the excise tax on cigarettes. The model can be customized to any country context and can simulate any tobacco tax reform. The model illustrates the impact of a tax change on the average retail price of cigarettes, cigarette consumption, and government excise tax revenue.

Tobacco use kills eight million people every year and is the leading cause of preventable deaths globally. Evidence shows that significantly increasing tobacco excise taxes and prices is the single most effective and cost-effective measure for reducing tobacco use. It is also a measure specifically called for in Article 6 of the WHO Framework Convention on Tobacco Control.

Raising taxes on tobacco products which leads to increases in their price makes tobacco less affordable. When tobacco becomes less affordable people use it less and youth initiation is prevented. Because youth and low-income groups are more responsive to increases in tobacco prices, they disproportionately enjoy the health and economic benefits of quitting and not starting. Saving lives with tobacco taxes lessens the enormous healthcare burden and economic losses that result from tobacco-related disease. Tobacco taxation is also relatively inexpensive to implement and generates significant revenues over the short and medium term.

The WHO FCTC Knowledge Hub provides technical assistance on the use of the TETSiM model for countries willing to undertake tobacco excise tax reform. Through this training and by developing country-specific TETSiM models, the Government of Tanzania can develop forecasts for the potential impact of a tax change, on changes in tobacco consumption, price, and government revenue generated.


Source: World Health Organization