Tobacco Tax Reform at the Crossroads of Health and Development

Abstract

This report provides policy makers and those who advise them with decision support for informed choices on tobacco tax policy. The book draws on a vast body of scientific literature and distills the key facts into accessible form, focusing on core issues fortobacco taxation in LMICs.Contributors explain the “Why?,” “What?,” and “How?” of tobacco tax reform. Starting withthe overall rationale (the “Why?”) they summarize the arguments that support tobacco taxation as a unique “win-win” for public health and public finance. And they show how tobacco taxes can work as a development catalyst. Authors also weigh the evidence on which specific tobacco tax designs work best (the“What?”). They review the advantages and drawbacks of different tax models, especiallyspecific (quantity-based) vs. ad valorem (value-based) tobacco excise regimes. They describeboth what leading experts recommend, and what countries are doing in practice.On “How-to?” issues, the report provides options for decision makers and implementers to translate good policy models into action and results. Contributors review implementationchallenges countries have encountered, the solutions used, and the outcomes obtained.Authors provide both high-grade quantitative evidence and qualitative insights intopolitical processes in countries. This report builds on the existing outstanding resources in the tobacco control literature.It cannot replace them. The distinctive expertise of the World Bank Group in tax policy can,though, help us to present key information in a format and a level of detail that policy makersand their teams can use to plan policies, take action, and save lives. The first five chapters offer a detailedpublic health, public finance, and development case for tobacco taxation. Chapter 1presents the book’s main arguments through the lens of integrated development.Chapter 2 further anchors the discussion in the epidemiology of the global tobaccoepidemic, tracing the epidemic’s past, present, and possible futures. The chapter offerspowerful public-health arguments for tobacco tax hikes.Chapter 3 focuses on the pragmatic aspects of tobacco tax reform, linking policy makers’practical concerns to the key arguments deployed throughout the report. This chapterfurther clarifies the rationale for raising tobacco taxes; compares specific tax designs; andexplores successful approaches to implementing tobacco tax hikes in the real world.Chapter 4 uses an economic model of the global cigarette market to quantify the health and fiscal benefits that would accrue to countries by raising tobacco taxes.Chapter 5 further builds the case for bold tobacco tax reform by showing how regionalcollaboration can enhance results. The chapter focuses on the example of the European Union (EU). The EU experience with harmonizing tobacco taxation at the regional levelshows that regional cooperation can help countries achieve the dual goals of reducing tobacco consumption and increasing government revenues.With the broad public health and economic case for tobacco taxation in place, Chapters6–9 focus on a series of key issues for the actual design, political marketing, and implementationof higher tobacco taxes. These chapters provide evidence that decision makers.