Comprehensive tobacco-control programs using
several price and nonprice interventions can substantially raise smoking-cessation rates and decrease initiation of smoking.
4
Uruguay implemented most of the FCTC provisions and reduced
consumption more rapidly than otherwise similar Argentina, which implemented only a few of
the provisions.
36
Large increases in specific excise taxes on tobacco are particularly important,
because they can have a substantial and rapid
effect on consumption.
6-9
Reviews of comprehensive control programs in various U.S. states
37,38
and other high-income areas
39
concur that higher
prices account for much, but not all, of the decline in smoking.
Similarly, an International Agency for Research
on Cancer review of more than 100 econometric
studies confirmed that tobacco taxes and consumption are strongly inversely related.
9
It concluded that a 50% increase in inf lation-adjusted
tobacco prices reduces consumption by about
20% in both high-income countries and low-
and middle-income countries,
6-9
corresponding
to a price elasticity (percent consumption change
per 1% price change) of about −0.4. Hence,
doubling inf lation-adjusted prices should reduce
consumption by about one third (in which case
revenues would increase, because the effect of
reduced demand would be outweighed by the
extra revenue per pack). Some of the effect among
adults is due to quitting (or not starting), and
some is due to reduced consumption per smoker.
9
Higher taxes are particularly effective in poorer or
less educated groups
6-9,39
and help prevent young
people who are experimenting with smoking
from becoming regular smokers.
40
The two major types of tobacco tax are specific excise taxes (which, being based on quantity or weight, are difficult for the industry to
manipulate) and ad valorem taxes (which are
based on manufacturer-defined price and can be
manipulated more easily). In many high-income
countries, about 50 to 60% of the retail price of
the most-sold brand is a specific excise tax on
tobacco or some variation of it (as in the European Union), but in low- and middle-income countries, this proportion is typically only about 35 to
40% (Fig. 3).
4,6
A low specific excise tax on tobacco is the main reason that cigarettes are about
70% cheaper (even after adjustment for purchasing power) in many low-income countries than in
high-income countries. Moreover, rapid income
growth in many low- and middle-income countries is making the lower-priced tobacco products
more affordable41
and helping cigarettes to displace bidis in India.