Tobacco taxation – a win for public health, a win for revenue and a win for the economy overall
A new tobacco tax manual recently released by WHO, confirms that the most cost-effective, mechanism for reducing tobacco consumption is a significant increase in excise taxes that leads to price increases. Although this evidence on the effectiveness of tobacco taxation is irrefutable, it remained the least implemented of the MPOWER measures (designed to support implementation of the WHO Framework Convention on Tobacco Control) in 2018 globally.
Even more concerningly, in many low- and middle-income countries over the past decade cigarettes have become more, rather than less, affordable. This could be due to many countries setting rates at insufficient levels and increasing them too infrequently, while others still use complex and inefficient taxation structures.
Tobacco taxation in the WHO European Region
Tax represents more than 75% of the retail price of the most popular brand of cigarettes in 25 out of 53 countries of the European Region. The fact that over half of countries in this region levy taxes below the best-practice level is a missed opportunity to raise funds for tobacco control and the health sector in general.
Moreover, a great disparity between cigarette retail prices was observed in 2018, with the price of a 20-cigarette pack of the top-selling brand varying from Int$ 1.82 in Belarus to Int$ 18.81 in Turkmenistan. Cigarettes have also become more affordable in 2 countries, while 13 countries had seen no trend change in affordability since 2008. Strengthening tobacco taxation will help European Region countries to bring about substantial reductions in tobacco use and the health and economic harms it causes.
WHO technical manual on tobacco tax policy and administration
Tobacco taxes work. This is why the industry invests so much money and effort in opposing tax increases and effective tax policies. Policy-makers, finance officials and others involved in tobacco tax policy development must not succumb to industry pressure and need to follow the facts when deciding on tax reform. The WHO manual provides all the information needed to make the right decisions at each step of the process – from designing, evaluating, implementing and administering tax policy to refuting industry attacks and ensuring the right support for tax policy change among legislators and the broader population.
Building back better with tobacco taxation
Fiscal policies can also be a key factor in addressing the socioeconomic consequences of the COVID-19 pandemic. Interventions such as tobacco taxation should be part of a comprehensive strategy to build back better. Indeed, as the new report shows, raising tobacco taxes is a SMART policy: it Saves lives; Mobilizes resources; Addresses health inequities; Reduces burdens on health systems; and Targets tobacco use, a major risk factor for noncommunicable diseases.