How Tobacco Taxes Can Expand Fiscal Space and Benefit the Poor

Smoking is a global health hazard. According to the World Health Organization, around 5-6 million people from around the world died because of tobacco use in 2010. Without effective interventions, this number could double by 2030.

Smoking-related illnesses and deaths aggravate the state of public health in many developing countries. In Asia, for instance, where two-thirds of the world’s smokers are found, infectious diseases and several outbreaks are always emerging and re-emerging. Thus, healthcare funds, instead of benefiting the poor more and helping stop infection outbreaks, are spread thin over a wider span of populations.

This situation calls for an effective strategy to deter the prevalence of smoking while simultaneously confronting the issue of communicable diseases, which could easily lead to epidemics and pandemics, such as 2010’s Avian Influenza.

One effective strategy is raising tobacco taxes. In 2012, the Asian Development Bank studied how increased cigarette prices and taxes in the People’s Republic of China, India, the Philippines, Thailand, and Vietnam have effectively reduced the number of smokers while generating additional incomes that could be allotted for public health. This publication shares the results of this study, and illustrates why raising taxes can be a win-win strategy.