Tobacco price policy

David Simpson

Director, International Agency on Tobacco and Health Visiting Professor, London School of Hygiene & Tropical Medicine

Honorary Fellow, Clinical Trial Service Unit

Editor, News Analysis, Tobacco Control journal

Strengths of taxation

• Known to be effective

• Effective immediately

• Most effective with young and poor

• No cost to government – earns revenue!

• Increases government revenue• Revenue can boost health promotion

Real price of cigarettes and annual cigarette consumption per adult (15 years of age and above),

South Africa, 1970-1989

0.05

0.06

0.07

0.08

0.09

Year

Cig

aret

te c

onsu

mpt

ion

per a

dult

(in p

acks

)

0.7

0.8

0.9

1

1.1

1.2

1.3

Rea

l pric

e

Consumption per adult

Real price

Saloojee, Y.

Cigarette price & consumption (UK)

90001000011000

12000130001400015000

1600017000

Year

Cig

aret

te c

onsu

mpt

ion

(£ m

illio

n, 1

995

pric

es)

£1.25

£1.75

£2.25

£2.75

Pric

e (£

) 199

4 va

lue

Consumption

Price

Townsend J.

Cigarette price & tax revenue(UK)

5500

6000

6500

7000

7500

8000

8500

9000

Year

Taxa

tion

reve

nue

(£ m

illio

n)

£1.40

£1.90

£2.40

£2.90

Pric

e (£

) 199

4 va

lue

Tax revenue

Price

Townsend J.

Structure of cigarette taxation

Tobacco tax

Manufacturers’ influence limited

Beneficial if high

- By weight of tobacco

Manufacturers reduce cigarette size

Effect Public health implications

Specific (by weight or by cigarette)

Beneficial

- By cigarette Manufacturer increases size of cigarette

Mostly beneficial

Per valorum(by value)

Manufacturers keep base levels low

Limited benefit