tobacco tax
Tobacco tax: good for health, good for government finances
Tobacco use kills over 5 million people each year and is the largest single preventable cause of premature death.1
Tobacco is very costly to society through high costs to treat tobacco-induced disease or through loss of productivity as a result of the premature deaths. But governments have a tool to combat the costs of tobacco use — tobacco taxation.
Higher tobacco prices decrease consumption and encourage people to quit
Increasing the price of tobacco products is the single most effective way to reduce consumption.2 Raising prices discourages uptake of tobacco use by young people and motivates people to quit tobacco use, while raising government revenues.3
Numerous studies in high income countries have shown that a 10% increase in cigarette price decreases consumption by about 4%.4
Available data indicate that consumption in low and middle income countries is even more responsive to price. For example, the estimated decreases would be about 5.5% in
China, 5.2% in Mexico and 5.4% in South Africa.5,6,7
For tobacco products other than manufactured cigarettes, studies are comparatively rare, although similar effects have been found.8
Price (SA rand)
Packs
100
25
Real Cigarette prices (2008 base)
Packs sold per capita
20
80
15
60
10
40
5
20
1980
1985
1990
1995
2000
2005
2009
0
Year
Inflation-adjusted cigarette prices and cigarette consumption,
South Africa, 1980-2009
Higher tobacco prices save lives
Decreasing consumption would translate into lives saved. The
World Bank has estimated that tax increases to raise the price of cigarettes by 10% would:
Cut the number of smokers in the world by 42 million —
38 million of them in low to middle income countries;
Save 10 million lives — 9 million of them in low to middle income countries.9
PHOTO: WBB Trust
WWW.NCDALLIANCE.ORG
How many lives could tobacco
Tobacco use kills over 5 million people each year and is the largest single preventable cause of premature death.1
Tobacco is very costly to society through high costs to treat tobacco-induced disease or through loss of productivity as a result of the premature deaths. But governments have a tool to combat the costs of tobacco use — tobacco taxation.
Higher tobacco prices decrease consumption and encourage people to quit
Increasing the price of tobacco products is the single most effective way to reduce consumption.2 Raising prices discourages uptake of tobacco use by young people and motivates people to quit tobacco use, while raising government revenues.3
Numerous studies in high income countries have shown that a 10% increase in cigarette price decreases consumption by about 4%.4
Available data indicate that consumption in low and middle income countries is even more responsive to price. For example, the estimated decreases would be about 5.5% in
China, 5.2% in Mexico and 5.4% in South Africa.5,6,7
For tobacco products other than manufactured cigarettes, studies are comparatively rare, although similar effects have been found.8
Price (SA rand)
Packs
100
25
Real Cigarette prices (2008 base)
Packs sold per capita
20
80
15
60
10
40
5
20
1980
1985
1990
1995
2000
2005
2009
0
Year
Inflation-adjusted cigarette prices and cigarette consumption,
South Africa, 1980-2009
Higher tobacco prices save lives
Decreasing consumption would translate into lives saved. The
World Bank has estimated that tax increases to raise the price of cigarettes by 10% would:
Cut the number of smokers in the world by 42 million —
38 million of them in low to middle income countries;
Save 10 million lives — 9 million of them in low to middle income countries.9
PHOTO: WBB Trust
WWW.NCDALLIANCE.ORG
How many lives could tobacco