BACKGROUND: Features of a country's cigarette tax system can enhance or undermine taxation's effectiveness in reducing smoking. While the World Health Organization (WHO) recommends policies to maximize taxation’s effectiveness, research on the combined effects of tax policies is limited. This paper examines the combined and independent impacts of key elements of countries' cigarette tax systems, as per the Tobacconomics Cigarette Tax Scorecard (TCTS), on adult smoking prevalence and consumption. The TCTS scores evaluate countries using cigarette prices, affordability, tax burdens, and tax structure.
METHODS: Using global WHO cigarette price and tax data (2008–2022) we generate tax system scores and link them to their underlying values. We combine them with WHO data on smoking prevalence and Euromonitor data on sales. Using two-way fixed-effect regressions, we examine the impacts of aspects of tax systems on both smoking prevalence and consumption, including the independent and combined impacts of the TCTS components. We also assess the potential of stronger overall tax system to increase the effectiveness of tax and price policies.
RESULTS: The overall tax system score is more effective in reducing smoking than any individual scoring component: a one-unit increase in overall tax system scores reduces prevalence by -0.89 percentage points and consumption by -7.6 percent. Among individual scores, the tax structure score has the largest impact on reducing prevalence, but the price score has the largest impact on reducing consumption. The effectiveness of a price increase to reduce tobacco use significantly improves when it is combined with a higher score.
CONCLUSIONS: Though the WHO's tax share target constitutes a good benchmark for countries, a higher tax share will not be effective in reducing tobacco use if not accompanied by improved overall tax systems and especially higher real prices. To reduce cigarette smoking, governments should fully implement all components of a strong tax system.