Cigarette retail prices have been an indicator used to compare the cost of living in different countries around the world. They have also been used as an anti-smoking tool by governments, who increase excise and sales taxes on cigarettes and tobacco, thus increasing the cigarette prices, hoping that the higher prices will lower the number of smokers or even deter people from starting to smoke. And, of course, higher taxes mean more revenue for the government.
Tobacco excise taxes often exceed half of the retail price. Looking at the percentage of excise in the cost of cigarettes, Cuba leads the pack with 87.1%, followed by the UK with 73.5%, and Australia at 54.7%.
Increased taxation on tobacco is certainly not a new occurrence, but it would seem that the number of countries which are going down that route has been steadily increasing. Higher tobacco taxes have been imposed in all corners of the world. In 2013 the Australian government announced that it would proceed with the implementation of four 12.5% tobacco excise increases, starting on December 2013, followed by September 2014, September 2015, and September 2016. In January this year, Indonesia, one of the countries with the highest number of smokers, raised its tobacco excise taxes by an average of 11%; with the highest increase of 12.96-16.47% levied on machine-rolled cigarettes and the lowest increase of 0-12% on hand-rolled cigarettes.
Thailand hiked up the excise tax on imported cigarettes from 87% to 90% of the imported price or up to the permitted ceiling, starting on February 9, 2016, resulting in prices for both local and imported cigarettes to go up THB5-10 (US$0.14-0.28) per packet. In Vietnam, the tax rate on tobacco increased from 65% to 70% as of January 1, and will go up to 75% as of January 1, 2019.
India increased tobacco taxes for the fifth consecutive year now, with this year’s increase to be between 10-15%, with excise duty on cigars, cheroots, and cigarillos going from 12.5% or Rp 3,375 (US$49) per thousand, whichever is higher, to 12.5% or Rp 3,755 per thousand, whichever is higher.
In the Middle East, governments of GCC countries have turned their attention to increasing tobacco taxation. For example, Saudi Arabia recently proposed to increase customs duty on tobacco to 200%, as well as increasing cigarette prices by 11%.
In North America, states have been steadily announcing higher tobacco taxation rates, while Ontario, Canada raised the tobacco excise from C$0.14 (US$0.11) to C$0.15 per cigarette, or an increase of C$3.00 in the price of a carton of 200 cigarettes, for example.
Even the last bastion for smokers, namely Russia and the CIS countries, have given in. In Russia, from January 1, the excise tax on cigarettes has increased from RUR960 (US$14.95) to RUR1,250 per thousand sticks, and the ad valorem (percentage of the retail price) from 11% to 12%. Because of the higher excise tax, cigarette prices in Russia increased by 15-17%, and the average price of a pack has reached RUR80 (US$1.25). In fact, according to Philip Morris International, cigarette prices in 2016 grew by 23% compared to the previous year. Cigarette prices in Kazakhstan and Belarus have also been hiked up this March.
In Kazakhstan the increase was 19.5%, KZT263 (US$0.79) per pack wholesale and 15.3% to KZT302 per pack retail.
Cigarette prices have been found to be lowest in Africa, where a 20-piece pack of cigarettes can be bought for as low as US$0.80, although cigarette prices in the Seychelles is high, around $5.60. Prices in Asia are also low with little difference from country to country, with some exceptions such as Brunei ($6.10), Turkmenistan ($5.70) and Singapore ($9.70). In Europe the prices vary, from around $1.10 in Eastern European countries to $15.10 in Western European countries. Prices vary greatly from state to state in the US as well. The highest cigarette prices, however, seem to be found in Australia ($17.40).
*Source for all tables:www.cigaretteprices.net