Tobacco Taxes: A Win-Win Measure for Fiscal Space and Health

Publication | November 2012

This study analyzes the potential fiscal, health, and poverty impacts of increasing cigarette taxes in five countries-the People’s Republic of China, India, the Philippines, Thailand, and Viet Nam.

Two-thirds of the world's tobacco users live in just 15 countries, and 5 of these high-burden countries (People's Republic of China, India, the Philippines, Thailand, and Viet Nam) are in Asia. This report aims to assess how changes in cigarette taxes can reduce consumption and save lives in these high-burden countries.

In the absence of intervention, smoking will eventually kill about 267 million current and future cigarette smokers who are alive today in the five countries. The report finds that for all five countries, increases in cigarette prices (in the range of 25%-100%) would effectively reduce the number of smokers and the number of smoking-related deaths, and generate substantial new revenues. In the five countries, a 50% price increase, corresponding to a tax increase of about 70%-122%, would reduce the number of current and future smokers by nearly 67 million and reduce tobacco deaths by over 27 million, while generating over $24 billion in additional revenue annually (a 143%-178% increase over each country's current cigarette tax revenue). The revenue increase, or "fiscal space," averages 0.30% of gross domestic product, with a wide range of 0.07%-2.52%.

The poorest socioeconomic groups in each country bear would only a relatively small part of the extra tax burdens, but reap a substantial proportion of the health benefits of reduced smoking. The ratio of health benefits accrued to the poor to the extra taxes borne by the poor ranges from 1.4 to 9.5. Thus, large increases in the cigarette tax in all of these countries are unusually attractive for public health and public finance, and are pro-poor in their health benefits.


"Raising tobacco taxes is the single most effective measure in reducing smoking rates - this is true of high, middle, and low income countries. In my experience, the biggest obstacles to tobacco control in these countries is the misconception by governments (fueled by the tobacco industry) that raising tobacco taxes will (i) reduce government revenue, (ii) encourage smuggling, and (iii) be unfair to poor smokers. None of these are true in practice. Instead, tax increases are 'pro-poor' as the report describes." - Prof. Dr. Judith Mackay, Director, Asian Consultancy on Tobacco Control; Senior Advisor, World Lung Foundation; and Senior Policy Advisor, World Health Organization

"...timely and relevant for all 176 countries that are Parties to the WHO Framework Convention on Tobacco Control, who are currently discussing international guidelines on tobacco taxation as an effective public health measure. The report corroborates the already large body of evidence that clearly demonstrates the benefits to both public health and public revenues if all governments had the same win-win perspective. We look forward to committed action by governments to raise tobacco taxes to reduce tobacco use, while also raising revenues." - Dr. Ulysses Dorotheo, Southeast Asia Tobacco Control Alliance (SEATCA) Initiative on Tobacco Tax


  • Foreword
  • Executive Summary
  • Background
  • Methods and Assumptions
  • Results
  • Discussion
  • Appendixes
  • References