Better Cigarette Tax Policy Increases Tax Revenues

This Policy Brief was written by Tobacconomics. The policy brief examines the association between the assessment of country cigarette tax performance in the Tobacconomics Cigarette Tax Scorecard and tobacco excise tax revenue. The study includes 70 countries between 2014 and 2018. The authors find that a 1-point increase in the overall score is associated with an increase in tobacco excise tax revenue by $11.57 per capita (in constant 2017 PPP international dollars). Similarly, in low- and middle-income countries, a 1-point increase is associated with an increase in tobacco excise tax revenue of $11.04 per capita (in constant 2017 PPP international dollars). A 1-point increase in the overall score among countries with low scores at the baseline is associated with an increase in tobacco excise tax revenue per capita by $6.77 (in constant 2017 PPP international dollars). Further, if all countries increased their score to the maximum 5 points, tobacco excise tax revenue per capita would increase by 21.60%. In LMICs, specifically, revenue would increase by 24.90% in this scenario. The policy brief concludes with recommendations for policy makers to improve their cigarette tax policies to raise additional tobacco excise tax revenue. 

A corresponding Working Paper can be found here.