| Summary: | Background
The study examines potential for tobacco tax to contribute to
mobilizing domestic resources, and improving public health in Nigeria.
Methods
Primary and secondary data were obtained from domestic sources. Cigarette
prices were collected through surveys of randomly selected retailers in six
states across six geopolitical zones in Nigeria. For analyses, two tax
simulations models were used: a home-grown model and the Tobacco
Excise Tax Simulation Model (TETSim). Each model was run under two scenarios:
Scenario 1-a 275 percentage increase in tobacco taxes, in line with WHO
excise tax benchmark of 75 percent of retail price; Scenario 2 - a less
stringent 150 percentage increase in line with a 50 percent
benchmark.
Results
A more stringent increase in excise
tax (Scenario 1) in both models would allow for the maximization of public
health and government revenue within a one year period. Under scenario
1: total cigarette consumption will fall by 19.6 percentage points (short-run)
and 71.4 percentage points (long-run); 4 million people (short-run) and 11
million people (long-run) will likely quit or fail to initiate smoking; 1
million (short-run) and 4 million (long-run) of those who quit could be saved
from smoking-related deaths. Under scenario 2: cigarette consumption will
fall by only 12.7 percentage points, 2 million people will likely quit or fail
to initiate smoking, 664,000 lives could be saved from smoking-related deaths. In terms of fiscal impact, an increase in excise tax would create a 114.5 percent increase in government revenue under
scenario 1 -from approximately N1.48 billion to N3.2 billion. Under scenario 2 increase by 75.7 percent - N2.6 billion.
Conclusions
An effective tobacco control tax policy in Nigeria
will entail a 275 percent increase in excise tax, a change in tobacco tax
structure -from ad valorem to specific; and stronger tax
administration and revenue-collecting agencies to yield the optimal results.
|
|---|