Why tax tobacco?
Tobacco use is the single largest cause of preventable death globally, killing around six million people each year. In addition to these premature deaths, tobacco use and exposure to second-hand smoke results in huge economic costs, such as greater spending on medical treatment of tobacco-related diseases and productivity losses from sick days and disability.
The WHO Framework Convention on Tobacco Control (WHO FCTC) was developed in response to the globalization of the tobacco epidemic. High tobacco taxes and prices have been demonstrated to be the single most effective and cost-effective interventions for reducing tobacco use, particularly among the young and the poor. On average, a 10% increase in cigarette prices worldwide would reduce consumption by 4% in high-income countries and by 8% in low– and middle-income countries.
WHO FCTC Article 6 calls for Parties to the treaty to use tax and price policies to reduce tobacco use. Tobacco taxes and retail prices should keep pace with each country’s economic and income growth and inflation rates to reduce tobacco affordability and discourage consumption. This will not only generate much-needed government revenues but also save countless lives.
WHO FCTC Article 6: Price and tax measures to reduce the demand for tobacco
1. The Parties recognize that price and tax measures are an effective and important means of reducing tobacco consumption by various segments of the population, in particular young persons.
2. Without prejudice to the sovereign right of the Parties to determine and establish their taxation policies, each Party should take account of its national health objectives concerning tobacco control and adopt or maintain, as appropriate, measures which may include:
(a) implementing tax policies and, where appropriate, price policies, on tobacco products so as to
contribute to the health objectives aimed at reducing tobacco consumption; and
(b) prohibiting or restricting, as appropriate, sales to and/or importations by international travellers of
tax- and duty-free tobacco products.