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Copenhagen Consensus Center

Best buys for Africa: Tobacco control in Africa

Fast-track Analysis

The proposed intervention is to raise the excise tax on tobacco to 75% of the retail price, following guidance from the World Health Organization. We used a pre-existing model that measures ROI of multiple tobacco control policies called the MPOWER package (WHO) but calculated the effects of only the tax increase intervention. According to traditional economic practice, we calculated the welfare cost of taxation – deadweight loss (DWL) – under 3 scenarios. The BCR of 5.6 includes the DWL which occurs in the year following the tax increase and based on cumulative tax increases from 2020 to 2033.  The BCR of 23 includes the DWL, based the incremental tax increases from 2020 to 2033. The third is the ROI of tobacco tax increase without DWL based on more recent economic theory. The calculated BCR range is 5.6 to 120 (no deadweight loss). The costs of implementing the tax are purely administrative and enforcement. They are extracted from the WHO NCD Costing Tool. Benefits are the value of reduced mortality and illness plus the associated avoided medical expenditures and productivity increases. Not included is expected increased tax revenue.  

Opportunities for scaling up this intervention are high as many countries are signatories to the Framework Convention on Tobacco Control – a legally binding multi-country agreement to control tobacco consumption. The FCTC Secretariat provides support to countries for policy implementation of tobacco control policies, including taxation. In addition, a high-level Task Force on Fiscal Policy issued a strong report in April 2019 advocating for health taxes.  The challenges of raising taxes are fierce opposition from industry and resistance among public finance economists in ministries of finance. There is abundant evidence that tobacco taxes work to achieve health goals but the implementation of the FCTC framework and policies has been unsatisfactory and must be strengthened for these goals to be achieved in practice.