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Global and regional overview of cigarette taxation

Global and regional overview of cigarette taxation

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Page 1: Global and regional overview of cigarette taxation

Global and regional overview of cigarette taxation

Page 2: Global and regional overview of cigarette taxation

TOBACCO TAX TRAINING WORKSHOP26-30 March 2012 – Bangkok, Thailand2 |

Types of taxes imposed on tobacco productsTypes of taxes imposed on tobacco products

Excises– Specific: based on quantity (e.g. $1.50 per pack regardless

of price)

– Ad-Valorem: based on value (e.g. 45 percent of the

manufacturer’s price)

– Hybrid/mix taxes- both specific and ad-valorem

VAT or Sales Taxes

Customs/import Duty

Page 3: Global and regional overview of cigarette taxation

Tax rates

Page 4: Global and regional overview of cigarette taxation

TOBACCO TAX TRAINING WORKSHOP26-30 March 2012 – Bangkok, Thailand4 |

Average Price of the Most Sold Brand & Excise Tax per pack, and Total Tax Share

Average Price of the Most Sold Brand & Excise Tax per pack, and Total Tax Share

By Income Group 2010

Source: WHO GTCR III

4.93

3.71 3.51

1.95

3.64

2.62

1.570.95

0.491.47

65.5%

51.6%40.8%46.5%50.8%

High Income Upper-middleIncome

Lower-middleIncome

Low Income Global

Inte

rnati

onal

$

%

Average price per pack Excise tax per pack Total Tax share, % Price

Page 5: Global and regional overview of cigarette taxation

TOBACCO TAX TRAINING WORKSHOP26-30 March 2012 – Bangkok, Thailand5 |

Average Price of the Most Sold Brand & Excise Tax per pack, and Total Tax Share

Average Price of the Most Sold Brand & Excise Tax per pack, and Total Tax Share

By Region 2010

2.88

3.93

1.81

4.02

3.19

6.04

0.941.37

0.47

2.21

1.361.95

65.6%

53.6%

52.9%

39.0%

45.2%43.2%

AFRO AMRO EMRO EURO SEARO WPRO

Inte

rnati

onal

$%

Average price per pack Excise tax per pack Total tax share (%of Price)

Source: WHO GTCR III

Page 6: Global and regional overview of cigarette taxation

TOBACCO TAX TRAINING WORKSHOP26-30 March 2012 – Bangkok, Thailand6 |

0%10%20%30%40%50%60%70%80%

Excise tax share Total tax share

Total and Excise Tax share of Price of Most Sold Brand, 2010

Total and Excise Tax share of Price of Most Sold Brand, 2010

Source: WHO GTCR III

Page 7: Global and regional overview of cigarette taxation

TOBACCO TAX TRAINING WORKSHOP26-30 March 2012 – Bangkok, Thailand7 |

Price of most sold brand, , $PPP excise tax and total tax as % of price of cigarettes, 2010

Price of most sold brand, , $PPP excise tax and total tax as % of price of cigarettes, 2010

Source: WHO GTCR III

-

1.0

2.0

3.0

4.0

5.0

6.0

Mala

ysia

Thaila

nd

Nepal

Brunei

Indo

nesia

Mon

golia

Laos

Bangla

desh

Cambodia

0%10%20%30%40%50%60%70%80%

Retail price, PPP Excise tax PPP Total tax share

Page 8: Global and regional overview of cigarette taxation

TOBACCO TAX TRAINING WORKSHOP26-30 March 2012 – Bangkok, Thailand8 |

Affordability of cigarettes over timeAffordability of cigarettes over time

Affordability of CigarettesA

ffo

rdab

ilit

y I

nd

ex,

Viet Nam

Bangladesh

China

Pakistan

Indonesia

1995=1

Mo

re a

ffo

rda

ble

tha

n 1

99

5L

ess a

fford

ab

le th

an

1995

Affordability index: dividing price by average GDP/capita for every year. Value for 1995 is assumed to be 1.The values of other years use 1995 as a base and look at the change from 1995. The estimated values that are less than 1 indicate that cigarettes become more affordable compared with 1995.

Page 9: Global and regional overview of cigarette taxation

Tax structure

Page 10: Global and regional overview of cigarette taxation

TOBACCO TAX TRAINING WORKSHOP26-30 March 2012 – Bangkok, Thailand10 |

Excise system on cigarettes Excise system on cigarettes

  Number of countries

Total covered 182

Specific excise only 51

Ad valorem excise only 54

Mixture of both excises 56

No Excise 20

Note: the countries sum up to 181, the 182nd country is Bhutan where sale is banned so no local consumption tax is applied

Source: WHO GTCR III

Page 11: Global and regional overview of cigarette taxation

TOBACCO TAX TRAINING WORKSHOP26-30 March 2012 – Bangkok, Thailand11 |

Average price and excise tax by tax structure, 2010

Average price and excise tax by tax structure, 2010

Excise tax structure Average price PPP Average excise PPP

Specific only 4.51 1.78

Ad valorem only 2.38 0.77

Mix system 3.81 2.17

Relying more on specific 4.42 2.54

Relying more on ad valorem 3.40 1.91

Source: WHO GTCR III

Page 12: Global and regional overview of cigarette taxation

TOBACCO TAX TRAINING WORKSHOP26-30 March 2012 – Bangkok, Thailand12 |

Different bases for tiered systems around the world

Different bases for tiered systems around the world

Differential /Tiered Excise taxes on cigarettes

    Number of countries

Total covered   156

With tiers   32 (21%)

Base of tiers Retail price 11

  Producer price 2

  Sales volume 1

  Production volume 1

  Type - filter/non filter 12

  Type - hand/machine made 2

  Type - kretek/white cigrette 1

  Packaging soft/hard 3

  Cigarette length 4

  Trade domestic/imported 1

  Weight (tobacco content in cigarette) 1

  Leaf content (domestic/imported) 3

Note :Of the 155 countries with available data in TMA, 10 countries has no exciseEight countries differentiate their excises based on more than on criteria.

Source: TMA 2009

Page 13: Global and regional overview of cigarette taxation

TOBACCO TAX TRAINING WORKSHOP26-30 March 2012 – Bangkok, Thailand13 |

Countries applying different types of taxes with tiers or at a uniform rate

Countries applying different types of taxes with tiers or at a uniform rate

Type of tax (Total number of countries 155)

Specific (48) Ad Valorem (49) Mix (48)

Tiers (18) Uniform (30) Tiers (6) Uniform (43) Tiers (6) Uniform (42)

Bosnia, Brazil, Belarus, Croatia, Fiji, India, Indonesia, Kazakhstan, Kyrgyzstan, Nepal, New Zealand, Papua New Guinea, Philippines, Republic of Korea, Sri Lanka, Tajikistan, Tanzania, Uzbekistan

Albania, Algeria, Andorra, Armenia, Australia, Azerbaijan, Barbados, Belize, Botswana, Brunei, Canada, Colombia, Cuba, Georgia, Haiti, Jamaica, Japan, Lesotho, Malawi, Mauritius, Namibia, Norway, Singapore, South Africa, Suriname, Swaziland, Trinidad & Tobago, Uganda, Uruguay, USA

Angola, Bangladesh, Burkina Faso, Côte d'Ivoire, Myanmar, Senegal

Bolivia, Burundi, Cambodia, Cameroon, Chile, Costa Rica, Congo, Ecuador, El Salvador, Ethiopia, Gabon, Guatemala, Guinea, Guyana, Ghana, Honduras, Iran, Kenya, Laos, Lebanon, Liberia, Libya, Mali, Mauritania, Mexico, Mozambique, Nicaragua, Niger, Nigeria, Panama Paraguay, Peru, Rwanda, Sierra Leone, Sudan, Togo, Turkey, Turkmenistan, Venezuela, Viet Nam, Yemen, Zambia, Zimbabwe

China, Madagascar, Moldova, Pakistan, Russia, Ukraine

Argentina, Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Dominican Republic, Egypt, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Jordan, Latvia, Lithuania, Luxembourg, Macedonia, Malta, Montenegro, Morocco, Netherlands, Poland, Portugal, Romania, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Syria, Thailand, Tunisia, UK

Note :1 -Out of the 155 countries for which there are data in TMA, 10 countries had no excise

2 -The following countries imposed a minimum tax in addition to their statutory rates: the 27 EU countries, Israel, Russia, Switzerland, Turkey, Turkmenistan and Ukraine.

Source: TMA 2009

Page 14: Global and regional overview of cigarette taxation

TOBACCO TAX TRAINING WORKSHOP26-30 March 2012 – Bangkok, Thailand14 |

Types of excises in participating countriesTypes of excises in participating countries

Specific Ad valorem Mix

Tiers Uniform Tiers Uniform Tiers Uniform

Indonesia, Nepal

 Brunei, Mongolia

Bangladesh Cambodia, Myanmar, Thailand

Laos Malaysia

Page 15: Global and regional overview of cigarette taxation

Revenues and expenditure

Page 16: Global and regional overview of cigarette taxation

TOBACCO TAX TRAINING WORKSHOP26-30 March 2012 – Bangkok, Thailand16 |

167.57

17.53 5.430.0010.0131.356

0

20

40

60

80

100

120

140

160

180

High-income

Middle-income

Low-income

US

$ p

er c

apit

a

Per capita excise taxrevenue from tobaccoproducts

Per capita publicspending on tobaccocontrol

Revenues from tobacco taxes and tobacco control expenditure, 2009Revenues from tobacco taxes and tobacco control expenditure, 2009

Source: WHO GTCR III

Page 17: Global and regional overview of cigarette taxation

TOBACCO TAX TRAINING WORKSHOP26-30 March 2012 – Bangkok, Thailand17 |

Revenues from tobacco taxes and tobacco control expenditure, 2009

Revenues from tobacco taxes and tobacco control expenditure, 2009

Source: WHO GTCR III

52.613

6.313

31.252

24.151

0.041

0.0300.001 0.0860.0000.3200.0

10.0

20.0

30.0

40.0

50.0

Brunei Bangladesh Indonesia Mongolia Thailand

Per capita Excise revenue, USD Per capita Expenditure on TC, USD

X 165

X 7,450

X 170,707

X 1.36

X 280

Page 18: Global and regional overview of cigarette taxation

TOBACCO TAX TRAINING WORKSHOP26-30 March 2012 – Bangkok, Thailand18 |

Countries which earmark tobacco taxes for health

Countries which earmark tobacco taxes for health

Country Area

Argentina, Belgium, Bulgaria, Comoros, Congo, Costa Rica, Egypt, El Salvador, Guatemala, India, Jamaica, Korea, Mongolia, Panama, Philippines, Thailand, Uruguay, USA (18)

Health (health sector strengthening, prevention, treatment)

Djibouti, Iceland, Iran, Poland, Qatar, Romania, Serbia, Switzerland, Tuvalu (9)

Tobacco control

Source: WHO 2009

Page 19: Global and regional overview of cigarette taxation

TOBACCO TAX TRAINING WORKSHOP26-30 March 2012 – Bangkok, Thailand19 |

Examples of earmarkingExamples of earmarking

Country Date legislation

Amount Allocation

India 2005 110 0r 180 Rs/1000 sticks depending on length of cigarettes

Health Cess funds the National Rural health Mission (NHRM) programme (improve health infrastructure and health systems in rural areas).

Philippines 2004 5% of the incremental excise tax on alcohol and tobacco products

The Philippine Health Insurance Corporation and Department of Health

Poland 1995 0.5% of the value of the excise tax on tobacco products

Tobacco control

Thailand 2001 2% on excise taxes imposed on tobacco and alcohol

Thai Health Promotion Foundation: Priority areas of interest: tobacco, alcohol, road accident, narcotic drugs, food, physical exercise, consumer protection.

Source: WHO 2009

Page 20: Global and regional overview of cigarette taxation

TOBACCO TAX TRAINING WORKSHOP26-30 March 2012 – Bangkok, Thailand20 |

ConclusionsConclusions

Cigarette taxes are low in low and middle income countries

Tax share as a price is an important indicator for tax level, but it's also important to look at price levels and evolution of affordability of products over time

Different tax structures are applied to cigarettes globally

Prices and taxes in amount tend to be higher for countries that apply specific excise

Excise revenues per capita are much higher than expenditure per capita on tobacco control programmes