World No Tobacco Day 2014: Raising tobacco taxes a win-win for governments
Raising tobacco taxes helps governments by generating revenue and discouraging smoking, which boosts public health and reduces health care costs.
Tobacco use causes 10 percent of adult deaths worldwide. As a result, this World No Tobacco Day (WNTD), FCA is joining WHO to urge governments to increase tobacco taxes.
Higher tobacco taxes benefit public health by helping:
- some existing smokers quit;
- teenagers refrain from smoking; and
- smokers reduce how much they smoke a day.
Article 6 of the WHO Framework Convention on Tobacco Control (FCTC) focuses on taxation, and in October, 178 Parties to the FCTC are expected to approve guidelines on putting Article 6 into action.
Examples of higher taxes’ successes
Although tobacco users do react when prices go up, they tend to reduce their consumption by less than the percentage increase in price, which means they end up paying more in tobacco taxes.
A recent article published in The New England Journal of Medicinenotes a 50 percent increase in inflation-adjusted tobacco prices reduced consumption by about 20 percent in high-income, and low and middle-income countries.
And bigger tax increases are more effective, the article adds: “The United States and the United Kingdom took more than 30 years to halve cigarette consumption per adult. With the use of large tax increases, however, France and South Africa halved consumption in less than 15 years.”
Because of low excise taxes, cigarette prices are far cheaper in many low and middle-income countries compared to high-income countries, even after adjusting for purchasing power. Increasing these taxes can produce significant results.
In Brazil, the average price of cigarettes more than doubled from 2006 to 2013. As a result, sales declined from 5.6 billion packs to 3.8 billion packs in the same period, and the number of smokers dropped from 21.4 million to 17.1 million. Revenue from tobacco excise taxes increased from 3.5 billion reals ($US1.6 billion) to 5.1 billion reals.
More recently, the Philippines revised its tobacco taxes, so that by 2017 the price of the country’s cheapest brands will have increased more than 1,000 percent.
FCA Director Laurent Huber said FCA is encouraging more governments to follow the leads of the Philippines, Brazil and other countries that have realised the importance of raising tobacco taxes to effective levels.
“We know this move saves lives: increasing tobacco taxes is one of the key measures in the FCTC, which has been ratified by 178 Parties representing nearly 90 percent of the world’s people,” he said.