Increase Price, Reduce Consumption

The most direct and effective method for reducing tobacco consumption is to increase the price of tobacco products through tax increases. Higher tobacco prices encourage cessation among existing tobacco users, prevent initiation among potential users, and reduce the quantity of tobacco consumed among continuing users.

Tobacco tax increases are the single most effective policy to reduce tobacco useWorld Health Organization Report on the Global Tobacco Epidemic, 2015

Higher taxes are particularly effective in reducing tobacco use among vulnerable populations, such as youth and low-income smokers.1

The monetary burden of higher tobacco taxes falls more heavily on the wealthiest users, whose tobacco use declines less, while most of the health and economic benefits from reductions in tobacco use are gained by the most disadvantaged populations, whose tobacco use declines to a larger extent when taxes increase.2, 3

10 Percent for 10 Million Lives

An increase in tobacco prices by 10 percent decreases tobacco consumption by 4 percent in high-income countries and by 5 percent in low- and middle-income countries.4 A price increase of 10 percent would reduce the number of smokers by 42 million worldwide and save 10 million lives.5

Tax increases directly benefit governments through increased revenues.6 Every nation and sub-national entity that has significantly increased its tobacco tax has enjoyed substantial increases in revenue, even while reducing smoking. There is considerable potential for tobacco taxation to generate much-needed financing for development and health programs, particularly in low- and middle-income countries.

The World Bank recommends setting tobacco taxes to between two-thirds to four-fifths of retail price.7 Few low- and middle-income countries achieve this level of taxation, and most can significantly increase their tax levels.

Article 6 of the Framework Convention on Tobacco Control requires that Parties to the treaty consider tax policies and price polices as a part of their overall national health policy and recommends that governments raise tobacco taxes to reduce tobacco consumption.

1 World Health Organization. 2015. WHO Report on the Global Tobacco Epidemic, 2015: Raising taxes on tobacco.
2 International Agency for Research on Cancer. 2011. IARC handbooks of cancer prevention: tobacco control. Volume 14: effectiveness of tax and price policies for tobacco control.
3 Asian Development Bank. 2012. Jha P, Joseph R, Li D, Gauvreau C, Anderson I, Moser P et al. Tobacco taxes: a win-win measure for fiscal space and health.
4 National Cancer Institute. 2016. Monograph 21: The Economics of Tobacco and Tobacco Control.
5 World Health Organization. 2004. Building blocks for tobacco control: A handbook. Geneva: Tobacco Free Initiative.
6 Goodchild, M., Perucic, A.M., Nargis, N. 2016. Modelling the impact of raising tobacco taxes on public health and finance. Bull World Health Organ. 94(4):250-7.
7 The World Bank. 1999. Jha, P. & Chaloupka, F.J. Curbing the epidemic: governments and the economics of tobacco control.

Last updated Sept. 13, 2017