Tobacco Free Initiative (TFI)

Raise taxes on tobacco

Best practices in tobacco taxation

The experiences with the variety of taxes and changes in taxes and tax structures applied to tobacco products around the world, supported by economic theory, provide an extensive evidence-base for identifying best practices in tobacco taxation. These best practices include the adoption of a relatively simple tax system that applies equivalent taxes to all tobacco products, with:

  • At least 70% excise tax share in final consumer price
  • Tax increases that exceed increases in consumer prices and incomes, to reduce the affordability of tobacco products
  • Minimization of incentives for tobacco users to switch to cheaper brands or products in response to tax increases
  • Improvement of tobacco tax administration to reduce opportunities for tax avoidance and tax evasion (including implementing effective monitoring systems for production and transport of traded tobacco products)