Tobacco taxation goal is not just to increase revenue

Media release
31 May 2013

Tobacco taxation is more about protecting the health of our people than increasing revenue. And when representatives from Ministries of Finance and Revenue are more concerned about the health impacts of a tax than the potential revenue gained, there must be a health crisis!

Tobacco and the NCD crisis in the Pacific

Tobacco-related “best buys”

  • Tax increases
  • Smoke-fee indoor workplaces and public places
  • Health information and warnings
  • Bans on tobacco advertising, promotion and sponsorship

Noncommunicable diseases (NCDs) such as cancer, heart disease and chronic respiratory diseases are the leading causes of death in the Pacific. In the Pacific region, 75% of deaths are attributable to NCDs. Tobacco use is one of the main risk factors for NCDs. Daily tobacco use among adults in the Pacific is as high as 54.8% in one country.

In an effort to help countries identify cost effective interventions to mitigate the NCD crisis, WHO has identified a set of “best buy” interventions. Increasing tobacco taxes is one such intervention that is being applied in the Pacific and around the world to reduce tobacco consumption, particularly among youth. Tobacco taxation is seen as a win-win strategy because of the potential impact it has to reduce consumption as well as increase government revenue.

Tobacco taxation in the Pacific

Workshop on tobacco taxation in the Pacific, New Zealand 2012
Workshop on tobacco taxation in the Pacific, New Zealand, 18-22 June 2012

As part of the Pacific Tobacco Taxation Project, a series of workshops, meetings, and country-based technical missions have been conducted to help Pacific countries increase tobacco taxes. In June 2012, seven countries including Fiji, the Federated States of Micronesia, Papua New Guinea, Samoa, Solomon Islands, Kingdom of Tonga and Vanuatu participated in a workshop that trained ministry of finance and revenue representatives on:

  • assessing their current tobacco-related tax structure related to tobacco; and
  • using the TaXSiM tax simulation software1 to develop a model for tobacco tax increase.

Tobacco tax increase across the Pacific

Countries across the Pacific are successfully increasing taxes on cigarettes.

  • The Cook Islands budget for 2013 includes a 33% increase on the import tax for cigarettes.
  • Fiji successfully increased the excise duty on both cigarettes and alcohol by 10% in 2012.
  • In Papua New Guinea, the 2012 budget included a 15% increase in tobacco excise tax and the 2013 budget includes a further 10% increase, which was acknowledged by Honourable Minister for Treasury as recognition of the adverse health impacts of smoking.
  • In Tonga, the 2013 tobacco taxation proposal includes a 15% increase in average price per pack in year one, a 15% increase in year two, and a 13% increase in year three.

Healthy islands are tobacco-free islands

Although Pacific islands face unique challenges with enforcement and regulation, increasing tobacco taxes in combination with other “best buys” will reduce tobacco consumption and therefore save lives (and money). These efforts are aligned with working to meet the global target of relative reduction in tobacco use by 30% by 2025. The only way Pacific islands can achieve the Healthy Islands vision set out by the Pacific Ministers of Health in 1995, is to become tobacco-free islands.