In 2018, only 38 countries, covering 14% of the world’s population, had sufficiently high tobacco taxes – which means that at least 75% of the cost of these harmful products is taxed. By implementing proven policies like tobacco taxes, the costs that the tobacco industry creates for local communities and the nation can be avoided. It is a benefit to population health, revenue, and development.
How Gambia significantly reduced cigarette consumption through tobacco taxation
In 2012, the Gambia cigarette prices were among the lowest in the African region. With the support of WHO, the country made a plan to increase the price of cigarettes. It worked so well that the country implemented an even more ambitious plan to increase the tobacco tax in the years that followed. As a result, sales in 2018 were almost three times higher than in 2011. In the meantime, cigarette imports have been reduced by over 60%.
“The results of these plans have exceeded our expectations,” said Mambury Njie, Honorable Minister of Finance and Economy in The Gambia. He said this convinced the country that raising tobacco taxes was a win-win to generate more revenue while reducing demand.
“I hope that our experience in The Gambia will encourage other countries to embark on their own reforms, especially in these COVID-19 pandemic times when the need to mobilize domestic resources that includes health is paramount” , he said.
Sri Lanka uses regular excise tax increases to reduce cigarette consumption
Sri Lanka now proudly achieves the highest level of taxes on cigarettes: taxes reach 77% of the price of the best-selling brand. In accordance with best practices in the WHO Tobacco Taxation Guide, Sri Lanka primarily relies on a specific excise tax, that is, a tax levied on selected products based on the quantity such as the number of cigarettes or the weight of the tobacco.
Taxes have been increased at regular intervals to effectively reduce the affordability and consumption of these deadly products. However, much remains to be done to reduce the high prevalence of tobacco use in the country.
“We are confident that following the best practices outlined in the manual will help us address these persistent challenges and improve the health of the Sri Lankan people,” said Nimal Siripala de Silva, Minister of Health of Sri Lanka.
The increase in taxation on cigarettes in Colombia leads to a 34% decrease in cigarette consumption
In 2016, Colombia had the second cheapest cigarettes in the Western Hemisphere after Paraguay (a major tobacco manufacturer).
As part of a broader tax reform in 2016, the specific tax rate for cigarettes was tripled from 2016 (COL $ 700 per pack) to 2018 (COL $ 2,100 per pack), with a real increase of 4% per year after 2019.
As part of a broader tax reform in 2016, the specific tax rate for cigarettes was tripled from 2016 (COL $ 700 per pack) to 2018 (COL $ 2,100 per pack), with a real increase of 4% per year after 2019.
Not only did cigarette consumption decline by 34% by 2018, excise tax revenues, which are earmarked to finance general health insurance (UHC), have almost doubled.
Hence, the tobacco tax reform reduced tobacco use (along with associated deaths, illnesses and costs). higher earnings; and contributed to the financial sustainability of the UHC system. A win-win-win situation for Colombia.
In addition, the illicit trade in tobacco products was treated with the same sanctions as money laundering.
“There are ways to do things right and Colombia has followed the example of those who have walked that path in the past. This is reflected in the manual. This experience has helped administrators design the right policies and methods of managing those taxes and benefits like reducing the consumption of harmful products that improve the health of the population, and when you can use the extra revenue to improve health too achieve, this is an added plus and an added benefit, ”said Dr. Mauricio Cardenas, Former Minister of Finance and Public Credit, Colombia.
Oman’s introduction of the excise tax on tobacco resulted in significant increases in tobacco prices that would be effective in reducing tobacco use
After having relied only on import duties on tobacco products for years, Oman introduced a high consumption tax as part of a joint decision by the Gulf Cooperation Council in 2019, which led to sharp price increases and made tobacco products less affordable.
According to WHO estimates, the share of taxes in the price of the best-selling brand of cigarettes rose from 25% to almost 64% between 2018 and 2020 thanks to the introduction of the excise tax. The price of the best-selling brand doubled from 1.2 to 2.2 Omani materials over the same period. We believe this will have a significant impact on reducing tobacco use and consumption, especially among adolescents.
“I would like to [thank] the WHO for updating the Tobacco Tax Policy and Administration Technical Manual, which is an important milestone for countries wishing to increase the effectiveness of their tax policies to reduce the exposure to tobacco. The focus on tobacco taxes will also play an important role in post-Covid-19 recovery efforts to raise more funds for health, “said Ahmed Mohammed Obaid Al Saidi, Minister of Health in Oman.
“Sin Tax” expands health insurance in the Philippines
The famous 2012 “Sin Tax” reform in the Philippines, which resulted in a significant reduction in tobacco use and an increase in revenue for UHC, became widely popular as a key success story of tobacco taxation (read here for more information on sin too receive tax reform). The Philippines has not remained idle since then.
The Philippines have successfully thwarted industry attempts to change the unified tax structure for cigarettes under the 2013 Sin Tax Law. Cigarette taxes are highest now, with an increase of five pesos per year through 2023 and an automatic increase of 5% thereafter.
Through improved tax administration and stricter enforcement, the government fined a domestic tobacco company for tax evasion in 2017. This resulted in the largest tax settlement in the history of the Philippines, valued at $ 600 million.
Excise taxes have also been introduced on heated tobacco products and e-liquids used in electronic cigarettes. The structure for excise duty on heated tobacco products is the same as for cigarettes, which is considered a best practice. In addition, unlike in most countries, a consumption tax is also levied on the equipment of these products.
The tobacco and alcohol taxes envisaged for Universal Health Care have also been more clearly defined and expanded to cover the tax on sugary beverages. These generate more income for the health sector.
“The Filipino experience shows what strong political will can do to protect people from consuming products that are detrimental to their health. It also shows how the government can break through powerful vested interests in order to carry out long overdue reforms. We hope to further improve our tobacco tax policy and administration by following the benchmarks and best practices contained in the handbook that the World Health Organization is making available to the public today, ”said Carlos G. Dominguez III, Finance Minister of the Philippines .