Background In December 2017, the 15-member ECOWAS (Economic Community of West African States) and the 8-member WAEMU (West African Economic and Monetary Union, a subset of ECOWAS) passed new Tobacco Tax Directives. Both Directives increased the minimum ad valorem excise tax rate to 50%. In addition the ECOWAS Directive introduced a minimum specific tax (US$ 0.02/stick), but the WAEMU Directive did not. This paper examines the likely effects of these new Directives on cigarette prices, sales volumes and revenues.
Method Tax simulation models using comparable data were constructed for each of the 15 countries to estimate the effects of the ECOWAS and WAEMU Directives.
Results If the 15 ECOWAS members implement the ECOWAS Directive it would substantially increase the retail price of cigarettes (unweighted average 51%, range: 12% to 108%), decrease sales volumes (22%, range: −8% to −39%) and increase tax revenue (373%, range: 10% to 1243%). The impact of the WAEMU Directive on WAEMU countries’ cigarette prices (unweighted average +2%), sales volumes (−1%) and revenue (+17%) is likely to be minimal.
Conclusions The 2017 ECOWAS Directive, which adds a specific excise tax per pack, along with an increase in the ad valorem tax, substantially improves its members’ cigarette tax structure. The specific tax overcomes the weakness of the ad valorem excise tax, since it does not depend on import or ex-factory values, which comprise only a small part of the retail price in ECOWAS countries. We recommend that WAEMU countries adopt the ECOWAS Directive, rather than the WAEMU Directive.
- low/middle income country
- public policy
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Contributors The models were mainly done by JT and the writing was shared.
Funding This study was supported by International Development Research Centre (IDRC (funding #108820-001)).
Competing interests None declared.
Patient consent for publication Not required.
Provenance and peer review Not commissioned; externally peer reviewed.
Data availability statement Data are available in a public, open access repository. Data are available upon reasonable request. WHO Report on the Global Tobacco Epidemic, 2019: Monitoring tobacco use and prevention policies. Geneva, Switzerland: WHO, 2019. https://www.who.int/tobacco/global_report/en/.United Nations Comtrade. United Nations Commodity Trade Statistics Database. https://comtrade.un.orgplc. GlobalData, https://www.globaldata.com Sociedade Caboverdiana de Tabacos, S.A. Annual Report and Accounts for 2018, http://www.bcv.cv/vPT/Mercado_de_Capitais/Sistema/Emitentes/Prestação_de_Contas/Documents/Relatórios_e_Contas_em_2019/Relatório__Contas_2018_SCT_FINALcompactado.pdf
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