Tobacco taxation policy in Kyrgyzstan (2015)

A study was carried out to estimate the impact of tobacco taxation policy in 2003–2014 on tobacco consumption and revenues in the country. Kyrgyzstan increased tobacco excise rates by a factor of four in 2011–2014, which resulted in a 5-fold increase in revenue over the 4-year period. 

However, no decline in tobacco consumption was observed. When the initial excise taxes are very low and the country experiences economic growth, tax increases result in a rise in revenue without a reduction in tobacco consumption, as tobacco affordability does not decline. 

In 2015, the average cigarette excise rates in Kyrgyzstan were doubled, which should ensure a reduction in tobacco affordability, and some decline of tobacco consumption is expected. Without an increase in excise rates in 2016, tobacco consumption is not expected to decline that year nor is it probable that there will be an increase in revenue. It is, therefore, recommended that the next increase, foreseen in 2017, be brought forward to 2016.