5.22 Taxation and pricing of tobacco products

Last updated October 2014 

As discussed in Section 5.12 (Affordability of tobacco), raising the price of tobacco products, particularly through manipulation of taxes or other imposts, is a key plank of a comprehensive tobacco-control policy, and is known to reduce smoking rates among younger smokers,1–3 based on the finding that young people are particularly responsive to changes in cigarette prices given their relatively low disposable income.3,4 Making tobacco more expensive may not necessarily affect rates of experimentation among adolescents, or indeed, among any age group, however, since experimenters tend not to buy their own cigarettes, but to acquire them from home, friends, or other disparate sources.5 Responsiveness to price among adolescents increases with intensity of smoking, since more committed smokers are more likely to purchase their own cigarettes. It is therefore likely that higher cigarette prices have their greatest impact among younger smokers when they are poised between experimentation and regular smoking.6

Jamrozik's 'ten point plan' for tobacco control includes advocating regular price increases on tobacco products based on convincing evidence that this can reduce consumption, especially among adolescents.7 Effective taxation policy needs to ensure, however, that increases in the price of tobacco are 'real' (that is, not offset by increases in earning capacity, or pocket money in the case of children) in order to maintain effect.8

The effects of pricing on consumption among young people and other smokers are discussed in greater detail in Chapter 13.

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1. US Department of Health and Human Services. Preventing tobacco use among young people: A report of the Surgeon General. Atlanta, GA: US Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health, 2012. Available from: http://www.cdc.gov/tobacco/data_statistics/sgr/2012/

2. US Department of Health and Human Services. Reducing tobacco use: a report of the Surgeon General. Atlanta, Georgia: US Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health, 2000. Available from: http://www.cdc.gov/tobacco/sgr/sgr_2000/index.htm

3. Lantz PM, Jacobson PD, Warner KE, Wasserman J, Pollack HA, Berson J, et al. Investing in youth tobacco control: a review of smoking prevention and control strategies. Tobacco Control 2000;9(1):47–63. Available from: http://tobaccocontrol.bmj.com/cgi/content/full/9/1/47

4. Eureka Strategic Research. Youth tobacco prevention research project. Undertaken for the Australian Government Department of Health and Ageing. Canberra: Department of Health and Ageing, 2005. Available from: http://www.health.gov.au/internet/main/publishing.nsf/Content/phd-pub-tobacco-literature-cnt.htm

5. Shope J, Copeland L, Marcoux B and Kamp M. Effectiveness of a school-based substance abuse prevention program. Journal of Drug Education 1996;26:323-37. Available from: http://baywood.metapress.com/app/home/contribution.asp?referrer=parent&backto=issue,2,7;journal,61 164;linkingpublicationresults,1:300320,1

6. Romano J. School personnel training for the prevention of tobacco, alcohol, and other drug use: issues and outcomes. Journal of Child & Adolescent Substance Abuse 1997;27:245-58. Available from: http://www.ncbi.nlm.nih.gov/pubmed/9366130

7. Jamrozik K. Population strategies to prevent smoking. British Medical Journal 2004;328:759-61. Available from: http://www.bmj.com/cgi/reprint/328/7442/759

8. World Health Organization. WHO technical manual on tax administration. Geneva: WHO, 2010. Available from: http://www.who.int/tobacco/publications/tax_administration/en/index.html