Tobacco taxes and public health:

Transcription

1 Tobacco taxes and public health: Can the Kazak government afford tobacco control by using tobacco tax measure? Ayda A. Yurekli, Ph.D Coordinator Tobacco Control Economics Tobacco Free Initiative World Health Organization

2 HIGHER PRICES/TAXES ARE GOOD FOR PUBLIC HEALTH & THE GOVERNMENTS Good for Public Health Reduce initiation & Increase quitting Young and the poor more responsive to price changes Reduce consumption in current users Prevent ex-users from starting again Good for the Economy Improves health status and reduces health care costs Increases government tax revenues Enables governments to finance health promotion projects

3 Tobacco provides sustainable revenue flow to total revenues in Kazakhstan Real total revenues (million tenge)- Left scale Real tobacco revenues (million tenge)- right scale Source: Estimated by author by WHO Database, IMF Economic outlook, Euromonitor, ERC

4 Decreasing real price leads to increasing consumption which contributes revenue increase Consumption/capita /pack Real Price/pack Tenges Real Tobacco Excise Revenue Source: Author's estimation by Euromonitor, ERC, IMF Economic outlook, WHO database

5 decreasing real tax per pack contributed to decline in real price/pack Nominal and Real price/pack Tenge Real tax/pack Tenge for filtered Nominal Average Price/pack Tenges Real Price/pack Tenges Real tax/pack of filtered Source: Source: Author's estimation by Euromonitor, ERC, IMF Economic outlook, WHO database

6 Increasing real per capita income also contributes to increasing consumption Real GDP/capita (000) Tenge per capita consumption/pack Source: Euromonitor, ERC, IMF Economic Outlook, calculated by author

7 Tobacco taxes in Kazakhstan Tenge per 1000 pieces Tobacco Products Filtered cigarettes Unfiltered cigarettes Cigarillos N/A N/a Cigars N/A N/A Lose tobacco (pipe, chewing, sucking, snuff, hookah) Source: WHO database, Konstantine Krasovsky, 1000 /kg 1220 /kg

8 Pros of Kazak Tax for Tobacco Same tax for local and imported tobacco in 2011 Unified specific excise for all filtered Unified specific excise for all unfiltered Increasing tax/pack in real terms after 2008 Closed gap in tax rates between cigarettes and other tobacco products Loose, chewing, snuff, hukka etc

9 25 Taxes/pack are increasing in real and nominal terms over the years Excise/pack of 20 pieces (Tenge) Nominal tax for filtered Nominal tax for unfiltered Real tax for filtered Real tax for unfiltered Source: WHO database, Konstantine Krasovsky,

10 Cons of Kazak Excise on Tobacco Differential excise rates for filtered and unfiltered cigarettes, cigars and cigarillos Gap has been increasing between filtered and unfiltered cigarettes since Specific excise has not been indexed with the inflation rates so it fluctuates. Tobacco Products Tenge per 1000 pieces Filtered cigarettes 1000 Unfiltered cigarettes 600 Cigarillas 1220 Cigars 95 Lose tobacco (pipe, chewing, sucking, snuff, hookah) 1220/kg

11 Kazak taxes and price compared to the World in 2008 $ % 54% Average price/pack (US$) Excise tax/pack (US$) Total tax share (% of price) 45% 50% 39% $2.66 $2.48 $2.53 $ % $1.01 $0.54 $1.06 $0.27 $0.75 $0.07 $0.95 High Upper-middle Lower-middle Low-income Kazakhstan Worldwide Source: WHO Report on the Global tobacco Epidemic 2009

12 Kazak taxes & prices and neighbors 2008 Average price/pack (US$) 43% 31% 37% Total tax share (% of price) 32% $ % 19.6% $0.61 $0.51 $0.50 $0.86 $0.75 Turkmenistan Kyrygz Rep Russia Uzbekistan Belarus Kazakshtan Source: WHO Report on the Global tobacco Epidemic 2009, TMA and Euromonitor

13 Can tax be increased in Kazakhstan? In 2011 tax will be increased Total tax as % of Price & (average price/pack in Tenge) Estimated Total Revenue from cigarettes (Million Tenge) % (90 Tenge/pack) , % (95 Tenge/pack) ,921 Source: Author's calculation

14 2011 tax increase falls short for reducing consumption Consumption Million packs % change % Source: Author's calculation

15 2011 tax increase would falls short for saving lives Adult smoking deaths Youth smoking deaths Current 1,406, ,874 Predicted after 2011 taxes 1,396, ,848 LIVES SAVED 9,788 9,026 Source: Author's calculation

16 How much and where to increase? Kazakhstan can generate significant revenues and save lives by increasing excise taxes significantly over the years, due to Lower price elasticity Lower share of tax in retail price Price gap should be reduced between cigarettes and tobacco products. Higher specific increase in unfiltered and other tobacco products- eg cigarillos and cigars

17 Tax increases & Expected Consequences If excise increases from 20 tenge/pack to 40 Tenge/pack Average price will increase by 23% Consumption will decrease by 16% Total revenue (Excise+VAT) will increase by 82% Youth prevalence will decrease by 9% 166,465 people will quit smoking 46,410 adults' LIVES will be SAVED 42,981 youth's LIVES will be SAVED

18 Bottom Line Kazakhstan government can afford tobacco control If committed to save Kazak's lives: they can increase taxes on tobacco products significantly but gradually. generate more revenues prevent youth to take up smoking encourage smokers to quit smoking It will be win-win situation for the government and the public health