Tripling Taxes on Tobacco Would Save 200 Million Lives

Issue 23, Summer/Fall 2014

Experts say steep price hikes are the fastest way to bring global smoking rates down

Like everyone else, smokers pay close attention to price. And a new analysis suggests that tripling excise taxes on tobacco products worldwide could lead a third of the world's smokers to quit - and save over 200 million lives in the process.

Global Smoking Rates

In 2013 the United Nations World Health Assembly called on governments to cut smoking rates by a third by 2025. However, "without large price increases, a reduction in smoking by a third would be difficult to achieve" contend Drs. Prabhat Jha and Richard Peto in a review published recently in the New England Journal of Medicine.

Prabhat, of St. Michael's Hospital and the University of Toronto, and Peto, of Oxford University, say the stakes have never been higher. As low- and middle-income countries become more affluent, cigarettes become more affordable and the number of people who die from smoking-related illness soars.

Right now, some of the world's most populous nations - including China, India, and Indonesia - have relatively low tobacco excise taxes, the experts note. And wherever cigarettes are relatively cheap, smoking rates climb and smoking cessation rates stall.

"Worldwide, about half a billion of the children and adults younger than 35 years of age already smoke or will do so if current uptake rates persist," the two experts write. "And given current cessation patterns, relatively few will quit."

But there's a quick, proven way to slow or even reverse rising levels of tobacco use: raise product prices.

Some countries that were once overwhelmed by high smoking rates have charted a turnaround by doing just that, Jha and Peto point out. For example, "with the use of large tax increases, France and South Africa halved [tobacco] consumption in less than 15 years,"they said. "From 1990 to 2005, France tripled inflation-adjusted cigarette prices by raising taxes 5 percent or more every year in excess of inflation."

Besides halving cigarette consumption in both France and South Africa, this tripling of tax rates doubled each country's tobacco tax revenues - money that governments could then funnel towards health care or smoking-cessation efforts.

Steep tax hikes could prove most useful in the developing world, where smoking rates continue to rise. "Higher taxes are especially effective in poorer or less educated people and help prevent young people who are experimenting with smoking from becoming smokers," Jha and Peto point out.

Of course, not everyone is happy about higher cigarette taxes: The tobacco industry is working tirelessly to keep product prices low. According to the review authors, Big Tobacco uses some of its billions in profits to exert, "enormous political influence that is used, among other things, to try to prevent large tax increase."

But the world's smokers have powerful friends in their corner, too. According to Jha and Peto, The Bill and Melinda Gates Foundation, Bloomberg Philanthropies, the World Bank and the Asian Development Bank are each providing counsel to some ministries of finance to counter misleading tax advice from the tobacco industry.