Measuring the effects of the new ECOWAS and WAEMU tobacco excise tax directives

Impact of waterpipe tobacco taxation on consumption, government revenue and premature deaths averted in Jordan, Lebanon and Palestine: a simulation study

INTRODUCTION

Despite the high prevalence of waterpipe tobacco smoking in the Eastern Mediterranean region, evidence supporting its fiscal measures is limited. We modelled the impact of waterpipe tobacco-specific excise taxes on consumption, government revenue and premature deaths averted in Jordan, Lebanon and Palestine.

METHODS

We developed a simulation model using country-specific and market share-specific price, consumption and price elasticity data from WHO, UN Comtrade and nationally representative surveys. We modelled increases to specific excise taxes to meet a 35.9% tax burden on 20 g of waterpipe tobacco in Lebanon and Jordan, in line with the global average, and to double government revenues from excise duties in Palestine, which has surpassed this average.

RESULTS

Specific excise tax was raised by $1.14 ($0.18-$1.32) in Jordan, $2.41 ($0.03-$2.44) in Lebanon (alongside removal of ad valorem taxes) and $2.39 ($1.72-$4.11) in Palestine per 20 g of waterpipe tobacco. Government revenue increased by $126.3 million in Jordan, $53.8 million in Lebanon and $162.4 million in Palestine while waterpipes smoked decreased by 32.4% in Jordan, 71.0% in Lebanon and 16.3% in Palestine. The corresponding numbers of premature deaths averted annually were approximately 162 000; 1 000 000; and 52 000.

DISCUSSION

Increases in waterpipe tobacco-specific excise taxes substantially reduce smoking and increase government revenue and averted premature deaths in Jordan, Lebanon and Palestine. This has positive implications for both public health and financing and should be considered a policy priority.

Cigarette excise tax structure and cigarette prices in nine sub-Saharan African countries: evidence from the Global Adult Tobacco Survey

BACKGROUND

Economic theory predicts that the excise tax structure influences the distribution of cigarette prices. Evidence shows that uniform specific excise tax structures exhibit the least price variability relative to other tax structures. The distribution of cigarette prices under different excise tax structures has never been examined for a group of African countries.

OBJECTIVES

To examine the distribution of cigarette prices under different tax structures in nine African countries and to critically evaluate the effectiveness of African regional tax directives in promoting public health.

METHODS

Data from the Global Adult Tobacco Survey, conducted in eight African countries during 2012-2018, and data from the 2017 Gambia Tobacco Survey were used to construct survey-derived cigarette prices. The coefficients of variation and skewness of the price distribution were compared in the context of each country's cigarette excise tax structure.

RESULTS

The least price variability is found in countries with a uniform specific tax, or a mixed system with a minimum specific floor. Cigarette price variability is largest in countries with uniform ad valorem tax structures. Three of the four countries with ad valorem tax structures are in regional blocs, where the tax directives specify that they should implement an ad valorem structure.

CONCLUSIONS

Regional tax directives that require the adoption of uniform specific excise taxes, or high minimum specific floors, could be an efficient way to get multiple African countries to adopt a tax structure that reduces substitution possibilities in response to excise tax increases.

No smoking gun: tobacco taxation and smuggling in Sierra Leone

OBJECTIVE

To evaluate the common industry claim that higher tobacco taxation leads to higher levels of smuggling, particularly in a limited state capacity setting.

DESIGN

This paper evaluates the effects of a tobacco tax increase in Sierra Leone on smuggling by using gap analyses. Its models are based on multiple rounds of the Demographic and Health Survey and customs data as well as newly collected data on cigarette prices.

RESULTS

The paper shows that despite a substantial increase in cigarette taxation, and despite the absence of other formal tobacco control policies, smuggling has not increased in Sierra Leone. Its primary model shows a decrease in cigarette smuggling by 16.74% following the tax increase, alongside a decrease in cigarette consumption more widely and an increase in tax revenue.

CONCLUSIONS

By presenting a low income and lower enforcement capacity case study, this paper provides novel and critical evidence to the debate on the tax-smuggling link. Furthermore, it points to new questions on how states in these contexts can limit cigarette smuggling.

Landscape of tobacco control in sub-Saharan Africa

Yearly, tobacco use kills about 8 million people globally, 80% of whom live in low/middle-income countries. Given sub-Saharan Africa's (SSA) rapidly increasing and youthful population, growing incomes and the increased presence of the tobacco industry, the number of tobacco users is growing. The region is predicted to face a heavier burden of tobacco-related diseases and deaths in the future. We examined the policy, advocacy, economic and media landscapes of tobacco control as well as tobacco industry interference in SSA. We also highlighted key challenges and priorities for intervention in the region. Their vast financial power has enabled transnational tobacco companies to interfere in tobacco control and slow down policy implementation efforts in SSA. Despite recent gains, inadequate investment in tobacco control has prevented effective tobacco control implementation in SSA. Other challenges include limited locally generated evidence and limited support from mainstream media to back policy and advocacy efforts. Finally, taxation, which is one of the most effective tools for tobacco control, is not yet adequately used in SSA partly due to non-harmonised taxation rates as well as exaggerated and false claims about the potential impacts of increasing taxes, especially that it will increase smuggling. Key priorities to address these challenges include continued strategic funding, capacity building of government and advocacy personnel to strengthen tobacco control governance, regional and institutional cooperation, harmonisation of subregional tax policies, cooperation among international funders, and increased industry monitoring and research in SSA.

Where to next for countries with high tobacco taxes? The potential for greater control of tobacco pricing through licensing regulation

Optimising the taxation of tobacco products should be among the highest priorities for health and hence economic policy in every country. The WHO Technical Manual on Tobacco Tax Policy and Administration released in April 2021 provides invaluable advice, including 26 best practice recommendations on policy design, administrative efficiency and addressing industry tactics to circumvent tobacco tax increases. Introducing and increasing tobacco taxes is the most important tobacco control measure for any jurisdiction. The effects of simple tax structures, high tax levels, and frequent above-inflation increases in specific excise duties can be enhanced through strict controls on packaging (including pack size), product design, and discounting. However, even with such measures, tobacco companies can continue to undermine the effectiveness of tax policy by offering some products in their ranges at very low prices, as well as gradually and selectively increasing the prices of some but not all products after tax increases. This paper is aimed at policymakers in countries that have already adopted best practice tax policy. It explores the idea of wholesale price capping combined with retail licensing to address the problems of brand proliferation, dispersion of prices, cushioning and strategic under/overshifting of tax increases, thereby radically and sustainably increasing the effectiveness of tobacco tax policy while also raising additional tax revenue for governments by reducing industry profitability.

Framing tobacco control: the case of the Nigerian tobacco tax debates

Studies have shown that the tobacco industry exerts significant policy-framing efforts to undermine tobacco control (TC) policies. However, most of this evidence is from high-income settings. This study applies framing analysis to the debate surrounding the 2016 tobacco import duty raise in Nigeria and subsequent rise in excise duty on tobacco, alcohol and selected food products in 2018 to understand why policy changes occurred. Print media documents and relevant actor publications published between 2016 and 2018 were analysed interpretively to identify key actors and arguments for and against the tax raise. Key opponents included tobacco companies, trade groups and allies. In contrast, the Ministries of Health and Finance, non-governmental organizations and international bodies like the World Health Organization advocated for the policy. The framing efforts of opponents were largely coordinated with significant alcohol industry involvement, while TC advocates lacked a unified front. Actors on both sides of the debate predominantly focused on economic and 'global ranking' arguments, and advocates also employed health and 'vulnerable groups' framing among others. The tax policy was sustained despite the framing and litigation efforts of opponents, and this is attributed principally to economic factors. The findings also suggest that tobacco is grouped with less harmful products, and advocates need to intensify efforts to diminish this legitimacy in low- and middle-income country settings. Additionally, there may be some benefits to jointly addressing alcohol and TC in this setting. Summarily, it is recommended that public health advocates coordinate their framing efforts to better articulate clear policy positions to the government, gain public support and ensure full Framework Convention on Tobacco Control compliance.

Estimating the price elasticity of demand for cigarettes in South Africa using the Deaton approach

OBJECTIVE

To estimate the price elasticity of demand for South Africa and thereby contribute to growing the evidence base of the likely impact of excise taxes on cigarette demand in low-income and middle-income countries.

METHODS

We employ the Deaton method, using wave 5 data from the South African National Income Dynamics Study, to estimate the cigarette price elasticity for South Africa. We used a sample of 6820 households.

RESULTS

Of the 6 820 households in the sample for which we had sufficient data, 1341 (19.7%) spent money on tobacco. The price elasticity of demand for cigarettes is estimated at -0.86 (95% CI -1.37 to -0.35), implying that the demand for cigarettes in South Africa declines by 8.6% for every 10% increase in price.

CONCLUSION

The negative price elasticity estimate for South Africa indicates that increases in the excise tax are particularly effective in controlling cigarette consumption. However, given the presence of a significant illicit tobacco market in the country, it is important that authorities augment tax measures with strategies that curb the illicit trade in cigarettes.