Tobacco Tax Increases Around the World– August 2023 Update
After decades of mounting evidence showing the devastating effects of the tobacco epidemic and the efficacy of taxation as a tool to curb harm, the tobacco control community may sound like a broken record. Still, tobacco use continues to be the leading cause of preventable death around the world, imposing a significant economic burden on smoking households, countries’ healthcare systems and entire economies alike. Therefore, it remains essential that policymakers adopt evidence-based best practices in tobacco taxation, and update them periodically to outpace inflation and income growth for maximum efficacy.
We have been monitoring tobacco tax increases around the world on the blog every six months since the start of 2022, with 18 countries updating their rates at the start of this year. Over halfway through 2023, we are excited to see 17 additional tax increases reported across five different regions.
Africa
Ghana passed the Excise Duty Amendment Act on March 31st, which replaced the less effective ad valorem excise structure with a hybrid (i.e., ad valorem and specific) excise structure to align with ECOWAS protocols. Beginning May 1st, the new rate on cigarettes is 50% of the ex-factory price in addition to a specific duty of 28 pesewas per stick. Forecasts suggest that tax revenues will increase by 215 million pesewas by 2024 as a result. Mauritius’s 2023-2024 budget, announced in June and effective July 1st, raises the excise duty on tobacco by 10%. This increased the price of a pack of 20 sticks from 123.76 to 136.14 Mauritian rupees. In Nigeria, excise taxes on tobacco products increased from 30% to 50% ad valorem, effective June 1st, while the specific component remained unchanged. Additionally, South Africa’s 2023-2024 budget included a 4.9% increase in excise duties on cigarettes, raising the price of a pack of 20 cigarettes by 0.98 rand. This increase is in place from March 1, 2023 through February 29, 2024.
Americas
In February, Paraguay announced a 2% increase of the country’s Selective Consumption Tax on tobacco, setting the rate at 22%. The change took effect in the first quarter of the year. No other tax increases occurred in the Americas during 2023 thus far. Countries in this region should follow the example set by others and seize the opportunity to implement more effective tobacco tax policies in the second half of the year.
Europe
As of April 1st, the excise tax on tobacco increased by 1.22 euros per pack in the Netherlands, with a subsequent identical increase set for next year. Estonia also announced plans for a series of tax increases in June. Excise duties on cigarettes and smoking tobacco will increase by five percent annually from 2024 to 2026, continuing annual increases that were implemented in previous years. Per Romania’s five-year calendar of excise tax increases, adopted in 2022, the price of cigarettes increased from 11.90 lei to 12.5 lei per pack. Similarly, the specific component of Serbia’s excise tax on tobacco increased from 82.75 to 84.25 dinar per pack on July 1st, with additional 1.5 dinar increases scheduled for every January and July until 2025. After raising its Special Consumption Tax on cigarettes in January, Turkey once again updated the tax for inflation, raising cigarette prices by 14.82% in July. On March 15th, the United Kingdom increased its tobacco duty rate by 2% above RPI inflation, raising consumer prices on all types of tobacco products. Finally, Ukraine implemented a 20% increase of the excise tax on tobacco as part of the plan to achieve tax rates closer to those in the European Union on January 1st. The new excise duty per pack is 41.94 hryvnia.
Southeast Asia
After three years without revision, India’s finance minister announced on February 1st, that the 2023 budget would bring an increase of about 16% in the National Calamity Contingent Duty on cigarettes. The exact degree of increase is dependent on the type of cigarette. Similarly, cigarette taxes increased about 20% in Sri Lanka on July 1st, with exact increases varying based on product size.
Western Pacific
The 2023 budget in Singapore includes a 15% increase in excise duties on all tobacco products, a change which took effect immediately after the budget was announced on February 14th. The increase is expected to generate 100 million Singaporean dollars in additional revenue a year. In Fiji, this year’s budget increased the Domestic Excise Duty on tobacco by 5%. This change took effect on June 30, 2023. Finally, Australia announced that taxes on tobacco products will increase by 15% over the next three financial years on top of indexation, with the first incremental 5% increase taking effect September 1, 2023. This expected to increase the average price of a pack of 20 cigarettes from 38.75 to around 40 Australian dollars.
While these tax increases are beneficial to reducing tobacco consumption and related costs, and are better than no increases, tobacco tax policies in most countries still do not align with widely-accepted best practices. Effectively reaching public health and revenue goals requires not only increasing tax rates, but also improving tax structure and implementation, ensuring tax rates outpace inflation and income growth, and increasing the tax share of retail price. To learn more about the elements affecting efficacy of cigarette tax policy and how countries around the world perform, check out the Tobacconomics Cigarette Tax Scorecard.