Ayda Yurekli

Tobacco taxes as a tobacco control strategy

Background Increases in tobacco taxes are widely regarded as a highly effective strategy for reducing tobacco use and its consequences. Methods The voluminous literature on tobacco taxes is assessed, drawing heavily from seminal and recent publications reviewing the evidence on the impact of tobacco taxes on tobacco use and related outcomes, as well as that on tobacco tax administration. Results Well over 100 studies, including a growing number from low-income and middle-income countries, clearly demonstrate that tobacco excise taxes are a powerful tool for reducing tobacco use while at the same time providing a reliable source of government revenues. Significant increases in tobacco taxes that increase tobacco product prices encourage current tobacco users to stop using, prevent potential users from taking up tobacco use, and reduce consumption among those that continue to use, with the greatest impact on the young and the poor. Global experiences with tobacco taxation and tax administration have been used by WHO to develop a set of ‘best practices’ for maximising the effectiveness of tobacco taxation. Conclusions Significant increases in tobacco taxes are a highly effective tobacco control strategy and lead to significant improvements in public health. The positive health impact is even greater when some of the revenues generated by tobacco tax increases are used to support tobacco control, health promotion and/or other health-related activities and programmes. In general, oppositional arguments that higher taxes will have harmful economic effects are false or overstated.

China at the crossroads: the economics of tobacco and health

Objective: To analyse economic aspects of tobacco control policy issues in China. Methods: Published and collected survey data were used to analyse economic consequences of smoking. Economic analysis was used to address the role of tobacco farmers and the cigarette industry in the Chinese economy. Results: In the agricultural sector, tobacco has the lowest economic rate of return of all cash crops. At the same time, the tobacco industry’s tax contribution to the central government has been declining. Conclusion: Economic gains become less important as the negative health impact of smoking on the population garners more awareness. China stands at a crossroads to implement the economic promises of the World Health Organization’s Framework Convention on Tobacco Control and promote the health of its population.

A cross-country study of cigarette prices and affordability: evidence from the Global Adult Tobacco Survey

Objective To describe the characteristics of two primary determinants of cigarette consumption: cigarette affordability and the range of prices paid for cigarettes (and bidis, where applicable) in a set of 15 countries. From this cross-country comparison, identify places where opportunities may exist for reducing consumption through tax adjustments. Data Self-response data from 45,838 smokers from 15 countries, obtained from the Global Adult Tobacco Survey (GATS) 2008–2011. Design Using self-response data on individual cigarette expenditure and consumption, we construct a measure of the average cigarette price smokers pay for manufactured cigarettes (and bidis, where applicable) in 15 countries. We use these prices to evaluate cigarette affordability and the range of prices available in each country. These survey-derived measures of cigarette price and affordability are uniquely suited for cross-country comparison because they represent each countrys distinctive mix of individual consumption characteristics such as brand choice, intensity of consumption, and purchasing behavior. Results In this sample of countries, cigarettes are most affordable in Russia, which has the most room for tobacco tax increase. Affordability is also relatively high in Brazil and China for cigarettes, and in India and Bangladesh for bidis. Although the affordability of cigarettes in India is relatively low, the range of cigarette prices paid is relatively high, providing additional evidence to support the call for simplifying the existing tax structure and reducing the width of price options. China has both high affordability and wide price ranges, suggesting multiple opportunities for reducing consumption through tax adjustments.

Exploring the relationship between cigarette prices and smoking among adults: a cross-country study of low- and middle-income nations.

INTRODUCTION Evidence on the relationship between cigarette prices and adult smoking in low- and middle-income countries (LMICs) is relatively limited. This study offers new descriptive evidence on this relationship using data from a set of 13 LMICs. METHODS We use Global Adult Tobacco Survey (GATS) cross-country data from approximately 200,000 participants aged 15 and older. Estimates on the relationship between prices and adult smoking were obtained from logit models of smoking participation and ordinary least squares models of conditional cigarette demand. RESULTS Higher prices were associated with lower demand across countries, in terms of both smoking prevalence and daily number of cigarettes smoked among smokers. Our estimates suggest that the total price elasticity of cigarette demand in LMICs is approximately -0.53. We find that higher socioeconomic status (SES), represented through wealth and education effects is associated with lower chance of smoking overall, but among existing smokers, it may be associated with a larger number of cigarettes smoked. CONCLUSIONS After controlling for a set of individual demographic and country characteristics, cigarette prices retain a significant role in shaping cigarette demand across LMICs. Because higher SES is associated with a reduced chance of smoking overall but also with increased daily consumption among current smokers, optimal tobacco tax policies in LMICs may face an added need to accommodate to shifting SES structures within the populations of these countries.

Who pays the most cigarette tax in Turkey

Background Although higher taxation of tobacco products is considered the most cost-effective tobacco control policy, its negative impact on low-income groups is one of the arguments used against it. Objective To investigate the impact of current excise taxes and the increases of excise taxes on tobacco and household expenditures by expenditure tertiles, and examine who pays excise taxes in general. Method Impacts of excise taxes on cigarettes are examined with a budgetary approach. We first estimate the price elasticity of cigarettes by expenditure tertiles using data from the 2003 Turkish Household Expenditure Survey, the most recent data set covering detailed tobacco product information relevant to our analysis. We then conduct a number of simulation analyses by increasing the excise taxes per pack of cigarettes and examine the impacts of these increases on household expenditures. Finally, as excise tax increases, we predict the total excise tax paid by households in different expenditure tertiles and compare the concentration curve of excise tax spending with the Lorenz curve showing the cumulative share of total household expenditures by expenditure tertiles. We estimate the progressivity coefficient that measures the area between the Lorenz and concentration curves. Results The low-income group is found to be the most sensitive to tax and price increases. It spends a relatively higher share of the household expenditure on cigarettes compared with higher income groups. However, the results suggest a different outcome as excise tax increases; the share of household expenditures spent on cigarettes declines for all household tertiles but a significant reduction occurs on the lowest expenditure tertile, suggesting that increases in excise taxes are progressive. Furthermore, the highest expenditure tertile pays the highest excise tax among expenditure tertiles, and their share in total excise revenue increases as the excise tax per pack of cigarettes increases. Conclusions The poor smoking households benefit the most from increases in excise taxes; from a budgetary perspective, as they reduce their smoking consumption significantly, the share of their excise payment in total household expenditures declines. From a health perspective, they are likely to have more health benefits as their consumption reduces. Government revenues are also predicted to increase with increased excise taxes, and the government can allocate a part of these revenue increases on implementing and enforcing other tobacco control measures including cessation support and smoke-free environments.

Nicotine and Tobacco Research Special Supplement: Economic Aspects of Tobacco Use in Low- and Middle-Income Countries

The impact of tobacco use on morbidity and mortality worldwide is exceedingly large. Tobacco use is expected to cause 8 million deaths per year by 2030, amounting to 1 billion deaths by the end of the century; the large majority of these deaths is projected to occur in lower and middle income countries (LMICs); (Mathers & Loncar, 2006). This impact, however, is preventable. The principal strategy for containing the global tobacco epidemic was formalized in 2003, when the World Health Organization’s Framework Convention for Tobacco Control (WHO FCTC) spelled out the common elements for tobacco control. The WHO FCTC, which has been ratified by 177 parties, underscores the importance of economic arguments in tobacco control (World Health Organization, 2003). In recognizing the influence of tobacco prices on tobacco use and its consequences, WHO has identified tobacco taxation as one of the very cost-effective interventions against noncommunicable diseases (World Health Organization, 2013). To help countries scale up implementation of cost-effective measures to reduce demand for tobacco, WHO introduced the MPOWER policy tool package in 2008, listing tobacco taxation as one of its six core measures. WHO further recommends that tobacco excise taxes reach and exceed 70% of the retail price for tobacco products (World Health Organization, 2010). The presumption is that if tobacco excise taxes—taxes that are applied exclusively to tobacco products—increased the price of tobacco relative to other products, tobacco products would become relatively less appealing and their consumption would decrease. The market response to price changes is summarized by the concept of price elasticity—the rate with which consumption declines in response to a percent price increase. Although there is long-standing literature on the economics of tobacco use in the United States and other high-income countries, such evidence on LMICs has historically been difficult to obtain. However, policy makers engaging in tobacco policy in LMICs need evidence that is tailored to their country or region. In light of this need, the Bloomberg Initiative to Reduce Tobacco Use has afforded a timely impetus for evidence generation with the rollout of the Global Adult Tobacco Survey (GATS). Data for many LMICs have become increasingly available with the continuation of GATS, as well as from the Global Youth Tobacco Survey (GYTS), other country-based surveys, and repeated installments of the WHO Report on the Global Tobacco Epidemic. These recent data present new opportunities for filling the gaps in economic research on LMICs and aiding the transition from research to policy to action in these countries. WHO has formulated a number of tobacco research priorities as part of a research agenda on noncommunicable diseases (World Health Organization, 2011). These focus specifically on the need for research on the impact of tax and price policies, including LMICs-specific price elasticity estimates and the impact of tobacco tax structure; research to optimize cessation interventions; research to assess the economic impact of tobacco use and control; and research on the inter-relationships between tobacco use and poverty, among others. The papers in this supplement address some of these research priorities by using recent data from multiple lowand middle-income countries. In the first paper, Chaloupka et al. use GATS data to examine the role of tax structure on a major determinant of cigarette consumption, the price variability across cigarette brands, and identify the type of tax structure that is most likely to help reduce tobacco use in in LMICs. The next several papers provide new evidence on the price elasticity of tobacco use in LMICs using data on adults from GATS and other similar surveys and on youth from GYTS. Kostova et al. use a crosssection of 13 LMICs to evaluate the magnitude of the negative relationship between prices and adult cigarette demand and the corresponding price elasticity, also shedding light on the role of socioeconomic status on smoking in LMICs. Nikaj and Chaloupka provide new estimates of the price elasticity of demand for cigarettes among youth using a set of 38 LMICs, while Joseph and Chaloupka focus specifically on youths in India and evaluate the price elasticity of their demand for cigarettes, bidis, and gutka; Sweiss and Chaloupka discuss results from independently collected data used to estimate the adult price elasticity of cigarette demand in Jordan. Quitting behavior among GATS adults is examined in Ross et al. and Shang et al.; Ross et al. quantify the impact of changes in tax policy on smoking cessation rates in Poland, Russia,