Taxation

Each year, tobacco kills 1.6 million people in the WHO European Region. While a combination of measures, such as those outlined in the WHO Framework Convention on Tobacco Control (WHO FCTC), are needed to effectively fight the tobacco epidemic, increases in tobacco taxes are known to reduce tobacco consumption faster than any other single measure. For this reason, taxation is a crucial tool in the effort to attain a tobacco-free Europe. Article 6 of the WHO FCTC encourages price and tax measures as effective means to reduce the demand for tobacco, including increasing taxes to raise the sales price of tobacco products and prohibiting or restricting sales of tax- and duty-free tobacco products.

Improving health, increasing revenue through taxes

The benefits of raising taxes on tobacco are dramatic. WHO estimates that if all countries increased the amount of excise charged on cigarette packs by 50%, there would be 49 million fewer smokers and at least 11 million tobacco-related deaths averted. Price increases through taxation usually bring the biggest health benefit to people with the least money to spend, including young people. The effects of price increases on young people are significant, reducing tobacco consumption at a rate 2-3 times higher than among adults.

Beyond the health benefits, taxes on tobacco have a secondary added value, in that they increase government revenue. According to WHO global estimates, if taxes were increased by 50% per pack, governments would earn an extra USD $101 billion. Such funds could go towards combating cancers, cardiovascular diseases and other noncommunicable diseases.

Recommendations for taxation efforts

The World Health Organization recommends a minimum 75% tax share of the retail price of tobacco, a goal that has already been achieved by 26 of the 53 countries in the Region. However, taxation efforts have been inconsistent, with some sub-regions making slower progress on taxation. For example, all 10 countries with less than 50% tax share of the retail price belong to the Commonwealth of Independent States (CIS).

The greatest challenges associated with implementing taxation measures are the price gap of cigarettes within countries and the price gap between neighbouring countries. The act of raising tobacco taxes and prices should, therefore, be coordinated among different ministries within a country (e.g., Ministry of Health and Ministry of Finance) and between neighbouring countries.

By fully implementing the WHO FCTC, and Article 6 in particular, the WHO European can reduce tobacco use and save lives.