Global and regional overview of cigarette taxation Types 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 2| TOBACCO TAX TRAINING WORKSHOP 26-30 March 2012 – Bangkok, Thailand Tax rates Average Price of the Most Sold Brand & Excise Tax per pack, and Total Tax Share By Income Group 2010 International $ 65.5% 4.93 Excise tax per pack 50.8% 3.71 46.5% 40.8% 51.6% 3.64 3.51 2.62 1.95 1.57 High Income Total Tax share, % Price Upper-middle Income 0.95 Lower-middle Income 1.47 0.49 Low Income Global Source: WHO GTCR III 4| TOBACCO TAX TRAINING WORKSHOP 26-30 March 2012 – Bangkok, Thailand % Average price per pack Average Price of the Most Sold Brand & Excise Tax per pack, and Total Tax Share By Region 2010 Average price per pack Excise tax per pack Total tax share (%of Price) 65.6% 53.6% International $ % 43.2% 52.9% 45.2% 6.04 39.0% 4.02 3.93 3.19 2.88 0.94 AFRO 1.37 1.81 2.21 1.95 1.36 0.47 AMRO EMRO EURO SEARO WPRO Source: WHO GTCR III 5| TOBACCO TAX TRAINING WORKSHOP 26-30 March 2012 – Bangkok, Thailand Total and Excise Tax share of Price of Most Sold Brand, 2010 Excise tax share 6| TOBACCO TAX TRAINING WORKSHOP 26-30 March 2012 – Bangkok, Thailand Total tax share Ca m bo di a Ne pa l on go lia M La os ar ya nm M al ay sia M In do ne sia Br un ei ad es h Ba ng l Th ai la nd 80% 70% 60% 50% 40% 30% 20% 10% 0% Source: WHO GTCR III Price of most sold brand, , $PPP excise tax and total tax as % of price of cigarettes, 2010 6.0 80% 70% 60% 50% 40% 30% 20% 10% 0% 5.0 4.0 3.0 2.0 1.0 Retail price, PPP Excise tax PPP Ca m bo di a ad es h Ba ng l La os on go lia M In do ne sia Br un ei Ne pa l Th ai la nd M al ay sia - Total tax share Source: WHO GTCR III 7| TOBACCO TAX TRAINING WORKSHOP 26-30 March 2012 – Bangkok, Thailand Affordability of cigarettes over time Affordability of Cigarettes Affordability Index, Less affordable than 1995 China Pakistan Indonesia More affordable than 1995 1995=1 Bangladesh Viet Nam 90 9 91 9 92 9 93 9 94 9 95 9 96 9 97 9 98 9 99 0 00 0 01 0 02 0 03 0 04 0 05 0 06 0 07 19 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 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. 8| TOBACCO TAX TRAINING WORKSHOP 26-30 March 2012 – Bangkok, Thailand Tax structure 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 10 | TOBACCO TAX TRAINING WORKSHOP 26-30 March 2012 – Bangkok, Thailand 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 11 | TOBACCO TAX TRAINING WORKSHOP 26-30 March 2012 – Bangkok, Thailand Different bases for tiered systems around the world Differential /Tiered Excise taxes on cigarettes Number of countries Total covered 156 With tiers Base of tiers 32 (21%) Retail price 11 Producer price 2 Sales volume 1 Production volume 1 Type - filter/non filter Type - hand/machine made 2 Type - kretek/white cigrette 1 Packaging soft/hard 3 Cigarette length Trade 4 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 excise Eight countries differentiate their excises based on more than on criteria. Source: TMA 2009 12 | 12 TOBACCO TAX TRAINING WORKSHOP 26-30 March 2012 – Bangkok, Thailand 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 13 | TOBACCO TAX TRAINING WORKSHOP 26-30 March 2012 – Bangkok, Thailand Types of excises in participating countries Specific Ad valorem Tiers Uniform Tiers Indonesia, Brunei, Bangladesh Nepal Mongolia 14 | TOBACCO TAX TRAINING WORKSHOP 26-30 March 2012 – Bangkok, Thailand Uniform Tiers Cambodia, Laos Myanmar, Thailand Mix Uniform Malaysia Revenues and expenditure Revenues from tobacco taxes and tobacco control expenditure, 2009 US $ per capita 180 167.57 Per capita excise tax revenue from tobacco products 160 140 Per capita public spending on tobacco control 120 100 80 60 40 20 1.356 17.53 0.013 5.43 0.001 0 Highincome Middleincome Lowincome Source: WHO GTCR III 16 | TOBACCO TAX TRAINING WORKSHOP 26-30 March 2012 – Bangkok, Thailand Revenues from tobacco taxes and tobacco control expenditure, 2009 52.613 50.0 X 165 X 170,707 40.0 X 280 31.252 30.0 24.151 X 1.36 X 7,450 20.0 6.313 10.0 0.320 0.041 0.001 0.000 0.0 Brunei Bangladesh Indonesia Per capita Excise revenue, USD 0.086 0.030 Mongolia Thailand Per capita Expenditure on TC, USD Source: WHO GTCR III 17 | TOBACCO TAX TRAINING WORKSHOP 26-30 March 2012 – Bangkok, Thailand 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 18 | TOBACCO TAX TRAINING WORKSHOP 26-30 March 2012 – Bangkok, Thailand Examples 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 19 | TOBACCO TAX TRAINING WORKSHOP 26-30 March 2012 – Bangkok, Thailand Conclusions 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 20 | TOBACCO TAX TRAINING WORKSHOP 26-30 March 2012 – Bangkok, Thailand