WHO approves rise in global tobacco tax.
The World Health Organisation (WHO) has approved a measure forcing countries around the world to raise excise taxes on cigarettes and tobacco products. In a secret session – the press were prohibited from attending – delegates from 179 countries representing around 90% of the global population voted to move ahead with the plan.
The ruling is a key component of the 2003 Framework Convention on Tobacco Control but critics claim it’s a step towards what will amount to a global tobacco tax. Those present at the conference called for strict pricing and taxation measures to curb the global demand for tobacco after acknowledging that an increase in price was an effective way to control tobacco use, especially among young people.
The international tobacco tax provision will demand all the countries who signed the UN anti-tobacco agreement implement a tax which is equivalent to 70% of the retail price of the tobacco products. All major countries have signed this agreement, except the United States, Indonesia, and Switzerland.
WHO, the UN’s public health division, said the tax hike is justified as tobacco creates a financial burden on health systems and on the economies of countries. An estimated six million people have died this year alone from tobacco-related illness.
“Parties that have increased tobacco taxes in general experience a corresponding increase in tobacco prices and, in some of those countries, a tax-driven reduction in tobacco consumption has been documented,” according to the WHO report.
The excise tax is the first step on the path to a global tobacco tax, which will encourage tobacco smuggling and illegal trade in tobacco products, without a major decline in smoking rates, say critics of the new tax policy.
Arthur Laffer, an American economist and expert on tax policy told the International Business Times, “One size does not fit all. Tobacco regulation and taxation are complex matters that require consideration of a number of political, economic and demographic factors prior to deciding on tax structures and levels.”