Tobacco taxation is the single most effective tobacco control measures. World Health Organization (WHO) has released the latest technical manual on tobacco tax policy and administration, summarizing the global trend, advising policy design and administration, and revealing interference of the tobacco industry.
In the manual, WHO emphasizes that tobacco tax increase, as part of a comprehensive tobacco control strategy, is key to improve public health and increase government revenues, especially in the COVID-19 pandemic. High tobacco tax should be imposed to effectively discourage smoking, with regular increase or automatic adjustments to avoid tax erosion by inflation and income growth. Currently, tobacco tax is highest in the European region due to the high level of minimum tobacco tax at 72.9% in the European Union. Nearly 30 countries have implemented automatic tobacco tax adjustments. For instance, Australia increases tobacco tax twice a year at wage growth (with extra increase of 25% in 2010 and extra 12.5% annually between 2013 and 2020), Canada increases tobacco tax every 5 years at inflation, and the United Kingdom increases tobacco tax by 2% above inflation.
WHO also reveals the SCARE tactics of the tobacco industry to interfere tax policy. The SCARE tactics include Smuggling and illicit trade (claiming that tobacco tax increase would increase illicit tobacco trade), Court and legal challenges (initiating legal challenges to tobacco tax), Anti-poor rhetoric (claiming that tax increase would hurt the poor), Revenue reduction (claiming that government revenues would be reduced after tax increase due to increased illicit tobacco trade), and Employment (claiming that tax increase will affect employment of related industries). However, evidence shows lower levels of illicit trade in countries with very high cigarette prices but higher levels of illicit trade in countries with low cigarette prices, pro-poor outcomes due to greater smoking reduction in poorer smokers, and greater government revenue increase for higher tax increases.
COSH is disappointed that the Hong Kong Government once again, for its 7th consecutive year, fails to increase tobacco tax in the 2021-2022 Budget. COSH strongly urges the Government to follow WHO recommendations, substantially increasing tobacco tax and implementing automatic adjustment, to reduce the affordability of tobacco products and maintain the declining smoking trend. The Government should also strengthen multiple tobacco control measures and formulate a timeline for a total ban on smoking to achieve smoke-free Hong Kong.
Source: WHO technical manual on tobacco tax policy and administration