Home

Tobacco Prices and Taxes

“The Parties recognize that price and tax measures are an effective and important means of reducing tobacco consumption by various segments of the population.”

—Article 6, Framework Convention on Tobacco Control

Higher tobacco taxes that lead to higher cigarette prices encourage smokers to quit, reduce the number of cigarettes smoked, and prevent initiation among potential new users. A 10 percent increase in cigarette prices reduces cigarette demand by 2.5 to 5 percent. Youth, minorities, and low-income smokers are two to three times more likely than other smokers to quit or smoke less in response to price increases. Because cigarette prices strongly influence smoking initiation in youth, price increases significantly reduce long-term trends in cigarette consumption.

Tobacco tax increases are simple and effective tobacco control tools. In addition to reducing cigarette consumption, tobacco taxes typically generate higher tax revenues. These funds can be used to implement and enforce tobacco control policies and pay for related public health and social programs. This is good news for policy makers seeking to protect public health but wary about losing an important source of government revenue.

The World Health Organization’s Framework Convention on Tobacco Control compels signatories to adopt tax and price policies that reduce tobacco consumption. The World Bank recommends that cigarette taxes (including value-added or sales taxes) account for two-thirds to four-fifths of the retail price of a pack of cigarettes. Cigarette tax increases significantly reduce cigarette consumption, improving both public health and national economic health.

China: A 10 percent increase in cigarette price would reduce consumption by 5 percent and raise enough revenue to pay for the basic health needs of 33 million rural residents.

chart chart
MPOWER logo

Monitor tobacco use and prevention policies
Protect people from tobacco smoke
Offer help to quit tobacco use
Warn about the dangers of tobacco
Enforce bans on tobacco advertising, promotion and sponsorship
Raise taxes on tobacco

Building on the first-ever global public health treaty - the Framework Convention on Tobacco Control (FCTC) - the World Health Organization (WHO) in 2008 issued a comprehensive country-level report on the global tobacco epidemic. This report provides data from 179 countries covering 99% of the world’s population and sets baselines for implementation and enforcement of the six evidence-based and cost-effective policies of the WHO MPOWER strategy. Currently only 5% of the world’s population is fully protected by any one of the MPOWER interventions and no country implements and enforces all of them. By taking action to implement MPOWER, the leaders of governments and civil society can create the necessary environment to protect children from tobacco, help people quit tobacco use and save millions of lives a year.

The final version of the online Tobacco Atlas will have information on MPOWER steps related to the issues portrayed on each map.

“With regard to taxation, it is clear that in the US, and in most countries in which we operate, tax is becoming a major threat to our existence.”

—Philip Morris, 1985