Global and regional overview of cigarette taxation

TOBACCO TAX TRAINING WORKSHOP March 2012 – Bangkok, Thailand 2 |2 | Types of taxes imposed on tobacco products Excises – Specific: based on quantity (e.g. $1.50 per pack regardless of price) – Ad-Valorem: based on value (e.g. 45 percent of the manufacturer’s price) – Hybrid/mix taxes- both specific and ad-valorem VAT or Sales Taxes Customs/import Duty

Tax rates

TOBACCO TAX TRAINING WORKSHOP March 2012 – Bangkok, Thailand 4 |4 | Average Price of the Most Sold Brand & Excise Tax per pack, and Total Tax Share By Income Group 2010 Source: WHO GTCR III

TOBACCO TAX TRAINING WORKSHOP March 2012 – Bangkok, Thailand 5 |5 | Average Price of the Most Sold Brand & Excise Tax per pack, and Total Tax Share By Region 2010 Source: WHO GTCR III

TOBACCO TAX TRAINING WORKSHOP March 2012 – Bangkok, Thailand 6 |6 | Total and Excise Tax share of Price of Most Sold Brand, 2010 Source: WHO GTCR III

TOBACCO TAX TRAINING WORKSHOP March 2012 – Bangkok, Thailand 7 |7 | Price of most sold brand,, $PPP excise tax and total tax as % of price of cigarettes, 2010 Source: WHO GTCR III

TOBACCO TAX TRAINING WORKSHOP March 2012 – Bangkok, Thailand 8 |8 | Affordability of cigarettes over time Affordability index: dividing price by average GDP/capita for every year. Value for 1995 is assumed to be 1.The values of other years use 1995 as a base and look at the change from The estimated values that are less than 1 indicate that cigarettes become more affordable compared with 1995.

Tax structure

TOBACCO TAX TRAINING WORKSHOP March 2012 – Bangkok, Thailand 10 | Excise system on cigarettes Number of countries 182Total covered 51Specific excise only 54Ad valorem excise only 56Mixture of both excises 20No Excise Note: the countries sum up to 181, the 182 nd country is Bhutan where sale is banned so no local consumption tax is applied Source: WHO GTCR III

TOBACCO TAX TRAINING WORKSHOP March 2012 – Bangkok, Thailand 11 | Average price and excise tax by tax structure, 2010 Average excise PPPAverage price PPPExcise tax structure Specific only Ad valorem only Mix system Relying more on specific Relying more on ad valorem Source: WHO GTCR III

TOBACCO TAX TRAINING WORKSHOP March 2012 – Bangkok, Thailand 12 | Different bases for tiered systems around the world Differential /Tiered Excise taxes on cigarettes Number of countries 156 Total covered 32 (21%) With tiers 11Retail priceBase of tiers 2Producer price 1Sales volume 1Production volume 12filter/non filterType - 2hand/machine madeType - 1kretek/white cigretteType - 3soft/hardPackaging 4Cigarette length 1domestic/importedTrade 1Weight (tobacco content in cigarette) 3Leaf content (domestic/imported) Note :Of the 155 countries with available data in TMA, 10 countries has no excise Eight countries differentiate their excises based on more than on criteria. Source: TMA 2009

TOBACCO TAX TRAINING WORKSHOP March 2012 – Bangkok, Thailand 13 | Countries applying different types of taxes with tiers or at a uniform rate Type of tax (Total number of countries 155) Mix (48)Ad Valorem (49)Specific (48) Uniform (42)Tiers (6)Uniform (43)Tiers (6)Uniform (30)Tiers (18) Argentina, Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Dominican Republic, Egypt, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Jordan, Latvia, Lithuania, Luxembourg, Macedonia, Malta, Montenegro, Morocco, Netherlands, Poland, Portugal, Romania, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Syria, Thailand, Tunisia, UK China, Madagascar, Moldova, Pakistan, Russia, Ukraine Bolivia, Burundi, Cambodia, Cameroon, Chile, Costa Rica, Congo, Ecuador, El Salvador, Ethiopia, Gabon, Guatemala, Guinea, Guyana, Ghana, Honduras, Iran, Kenya, Laos, Lebanon, Liberia, Libya, Mali, Mauritania, Mexico, Mozambique, Nicaragua, Niger, Nigeria, Panama Paraguay, Peru, Rwanda, Sierra Leone, Sudan, Togo, Turkey, Turkmenistan, Venezuela, Viet Nam, Yemen, Zambia, Zimbabwe Angola, Bangladesh, Burkina Faso, Côte d'Ivoire, Myanmar, Senegal Albania, Algeria, Andorra, Armenia, Australia, Azerbaijan, Barbados, Belize, Botswana, Brunei, Canada, Colombia, Cuba, Georgia, Haiti, Jamaica, Japan, Lesotho, Malawi, Mauritius, Namibia, Norway, Singapore, South Africa, Suriname, Swaziland, Trinidad & Tobago, Uganda, Uruguay, USA Bosnia, Brazil, Belarus, Croatia, Fiji, India, Indonesia, Kazakhstan, Kyrgyzstan, Nepal, New Zealand, Papua New Guinea, Philippines, Republic of Korea, Sri Lanka, Tajikistan, Tanzania, Uzbekistan Note: 1- Out of the 155 countries for which there are data in TMA, 10 countries had no excise 2- The following countries imposed a minimum tax in addition to their statutory rates: the 27 EU countries, Israel, Russia, Switzerland, Turkey, Turkmenistan and Ukraine. Source: TMA 2009

TOBACCO TAX TRAINING WORKSHOP March 2012 – Bangkok, Thailand 14 | Types of excises in participating countries MixAd valoremSpecific UniformTiersUniformTiersUniformTiers MalaysiaLaosCambodia, Myanmar, Thailand Bangladesh Brunei, Mongolia Indonesia, Nepal

Revenues and expenditure

TOBACCO TAX TRAINING WORKSHOP March 2012 – Bangkok, Thailand 16 | Revenues from tobacco taxes and tobacco control expenditure, 2009 Source: WHO GTCR III

TOBACCO TAX TRAINING WORKSHOP March 2012 – Bangkok, Thailand 17 | Revenues from tobacco taxes and tobacco control expenditure, 2009 Source: WHO GTCR III X 165 X 7,450 X 170,707 X 1.36 X 280

TOBACCO TAX TRAINING WORKSHOP March 2012 – Bangkok, Thailand 18 | Countries which earmark tobacco taxes for health AreaCountry Health (health sector strengthening, prevention, treatment) Argentina, Belgium, Bulgaria, Comoros, Congo, Costa Rica, Egypt, El Salvador, Guatemala, India, Jamaica, Korea, Mongolia, Panama, Philippines, Thailand, Uruguay, USA (18) Tobacco controlDjibouti, Iceland, Iran, Poland, Qatar, Romania, Serbia, Switzerland, Tuvalu (9) Source: WHO 2009

TOBACCO TAX TRAINING WORKSHOP March 2012 – Bangkok, Thailand 19 | Examples of earmarking AllocationAmountDate legislation Country Health Cess funds the National Rural health Mission (NHRM) programme (improve health infrastructure and health systems in rural areas) r 180 Rs/1000 sticks depending on length of cigarettes 2005India The Philippine Health Insurance Corporation and Department of Health 5% of the incremental excise tax on alcohol and tobacco products 2004Philippines Tobacco control0.5% of the value of the excise tax on tobacco products 1995Poland Thai Health Promotion Foundation: Priority areas of interest: tobacco, alcohol, road accident, narcotic drugs, food, physical exercise, consumer protection. 2% on excise taxes imposed on tobacco and alcohol 2001Thailand Source: WHO 2009

TOBACCO TAX TRAINING WORKSHOP March 2012 – Bangkok, Thailand 20 | Conclusions Cigarette taxes are low in low and middle income countries Tax share as a price is an important indicator for tax level, but it's also important to look at price levels and evolution of affordability of products over time Different tax structures are applied to cigarettes globally Prices and taxes in amount tend to be higher for countries that apply specific excise Excise revenues per capita are much higher than expenditure per capita on tobacco control programmes