Higher tobacco taxes results in decreased tobacco usage

Published on April 7, 2008 9:55 AM

The nation needs a strategy to reduce the death and disability caused by the use of tobacco products. Numerous measures have been employed to successfully reduce the demand for tobacco products, reduce smoking prevalence, limit youth initiation, and increase cessation rates. Such measures include increasing prices by imposing higher cigarette taxes, restrictions on public smoking, providing anti-tobacco advertising and mandating warning labels.

However, of all the intervention methods, the price has been shown to be the single most effective mean of altering tobacco use behavior.

Higher prices have the added benefit of reducing use among people not addicted to nicotine yet, including young people, whose level of tobacco consumption may be more sensitive to price.

National data show that every 10% increase in cigarette excise tax reduces cigarette consumption among the general population by 4%. Evidence suggests that the young are up to three times more sensitive to price than adults and that because 90% of smokers start as teens, higher taxes can sharply reduce smoking rates in the long run.

Bungon Ritthiphakdee, director of the Bangkok-based South-East Asia Tobacco Control Alliance, said: "Higher taxes on tobacco lead to higher prices for tobacco products, which immediately discourage non-smokers from starting and current smokers from continuing with the habit."

The World Bank recommends governments to impose taxes above 65%, which is the level, according to studies, at which smoking goes down but government tax revenues from the tobacco industry continue to go up.

"Between 1993 and 2007, Thailand increased tobacco taxes eight times in a row, from 55% to 80%. And the number of packs sold decreased from 2.1 million packs in 1993 to 1.9 million packs in 2007," said Dr Paiboon Wattanasiritham, former chairman of the Thai Health Promotion Foundation.

And yet, as cigarette sales fell down, tax income from these sales rose from 15 billion baht in 1993 to 41 billion baht in 2007.

In addition, it is important that funds collected through tobacco excise taxes are used for effective cessation services, such as helplines, or programs that provide counseling or pharmaceutical aids for smokers. These proven cessation aids can help increase the rate of cessation by two times or more, and may encourage more people to quit using tobacco products.