Taxation & Price: Overview
“…Price and tax measures are an effective and important means of
reducing tobacco consumption by various segments of the population, in
particular young persons.”
—WHO Framework Convention on Tobacco Control
Research studies and reports from all over the world show that tax and
price increases are among the most effective ways to reduce tobacco
use. In high-income countries, a 10 percent rise in price reduces
overall cigarette consumption by about 4 percent.
Price increases not only reduce overall cigarette consumption but
also decrease the total number of smokers and increase the number of
quit attempts.
Price increases also decrease the likelihood that young people will
start smoking. And, research suggests that in low-income countries,
price increases may have an even greater effect. Tobacco tax increases
are a particularly good way to achieve higher prices.
In one document, Philip Morris executives said that "Of all the
concerns, there is one - taxation - that alarms us the most. While
marketing restrictions and public and passive smoking (restrictions) do
depress volume, in our experience taxation depresses it much more
severely. Our concern for taxation is, therefore, central to our
thinking...."
Tobacco taxes also raise revenue for governments that can be used for
health, education, and tobacco cessation services. For example, each
year the government of Turkey collects more than 10% of its total
revenue, which amounts to billions of dollars, in cigarette taxes.
