Modelling the impact of raising tobacco taxes on public health and finance.

Mark Goodchild,Nigar Nargis,Anne-Marie Perucic

doi:10.2471/blt.15.164707

Abstract

ObjectiveTo investigate the potential for tobacco tax to contribute to the 2030 agenda for sustainable development by reducing tobacco use, saving lives and generating tax revenues.MethodsA model of the global cigarette market in 2014 – developed using data for 181 countries – was used to quantify the impact of raising cigarette excise in each country by one international dollar (I$) per 20-cigarette pack. All currencies were converted into I$ using purchasing power parity exchange rates. The results were summarized by income group and region.FindingsAccording to our model, the tax increase would lead the mean retail price of cigarettes to increase by 42% – from 3.20 to 4.55 I$ per 20-cigarette pack. The prevalence of daily smoking would fall by 9% – from 14.1% to 12.9% of adults – resulting in 66 million fewer smokers and 15 million fewer smoking-attributable deaths among the adults who were alive in 2014. Cigarette excise revenue would increase by 47% – from 402 billion to 593 billion I$ – giving an extra 190 billion I$s in revenue. This, in turn, could help create the fiscal space required to finance development priorities. For example, if the extra revenue was allocated to health budgets, public expenditure on health could increase by 4% globally.ConclusionTobacco taxation can prevent millions of smoking-attributable deaths throughout the world and contribute to achieving the sustainable development goals. There is also potential for tobacco taxation to create the fiscal space needed to finance development, particularly in low- and middle-income countries.

Highlights

The use of a tobacco tax to reduce smoking is still relatively new in many countries, there is a long history throughout the world of governments implementing such a tax to generate revenue
In many forums, tobacco taxation has been highlighted as a means of mobilizing domestic resources to finance health and other development programmes.[1,2,3]
The quantity of cigarettes sold in each country was calculated using data from two market survey companies – Canadean[14] and Euromonitor International15 – and from World Health Organization (WHO’s) work with Member States.[16]

Summary

Introduction

The use of a tobacco tax to reduce smoking is still relatively new in many countries, there is a long history throughout the world of governments implementing such a tax to generate revenue. In July 2015 the United Nations General Assembly endorsed the Addis Ababa Action Agenda. In this agenda, which was an outcome of the Third International Conference on Financing for Development, the United Nations recognized that “price and tax measures on tobacco can be an effective and important means to reduce tobacco consumption and health-care costs, and represent a revenue stream for financing for development in many countries.”[4]. In September 2015, the 2030 Agenda for Sustainable Development was adopted in a United Nations General Assembly.[5] This agenda includes 17 sustainable development goals (SDGs) that all Member States have agreed to achieve by 2030. SDG 3, which is to “ensure healthy lives and promote well-being for all ages”, includes target 3.4 – to reduce premature mortality from noncommunicable diseases by one third – and target 3.a – to strengthen country-level implementation of the World Health Organization’s (WHO’s) Framework Convention on Tobacco Control (FCTC).[5,6]

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Discussion

Conclusion