Abstract

Introduction: Tobacco taxation is only effective in reducing consumption when it is translated into higher prices. This study aims to investigate to what extent the tobacco industry (TI) passes tax increases over to consumers by increasing the retail price of cigarettes in 12 sub-Saharan African (SSA) countries. Methods: African Cigarette Prices Project and WHO's Global Tobacco Epidemic Reports data were used to calculate the rate of tax pass-through by decomposing the retail price of cigarettes into tax and net prices between 2016 and 2020. Percentage change in net price was used to identify industry pricing behaviour, in both packs and single-stick sales. TI pricing strategies were examined by country, producer type, producers, and cigarette price segment. Results: There were mixed TI strategies, with taxes primarily overshifted (Botswana, Madagascar, Tanzania, Zimbabwe), undershifted (Ethiopia, Lesotho, Mozambique, Namibia, South Africa, Zambia) or a mix of both (Malawi, Nigeria). The detail varied between countries, over time, and between the different brands/segments offered. Patterns for single-stick sales were broadly similar to that of packs but with some differences observed in particular countries/years. Pricing strategies for the various transnational tobacco companies and domestic producers were similar but the changes in net price for the latter were larger. The country tax level/type and the size of tax change did not seem to be an obvious influence. Conclusion: This paper provides an overview of TI pricing strategies in response to tax increases in SSA. Governments must monitor how the TI responds to tax changes to ensure that tax increases are effective in impacting price.

Original languageEnglish
Article numbertc-2023-058054
Pages (from-to)48-52
JournalTobacco Control
Volume34
Early online date11 Aug 2023
DOIs
Publication statusPublished - 2 Jan 2025

Funding

ZDS is funded by Cancer Research UK (Funding Grant Number A29421), JRB and ABG acknowledge the support of Bloomberg Philanthropies Stopping Tobacco Organizations and Products project funding (www.bloomberg.org). KVDZ was supported by the Bill & Melinda Gates Foundation through the African Capacity Building Foundation (UCT00034303).

Keywords

  • Low/Middle income country
  • Price
  • Taxation
  • Tobacco industry

ASJC Scopus subject areas

  • Health(social science)
  • Public Health, Environmental and Occupational Health

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