Cigarette taxation and price differentials in 195 countries during 2014-2018

Introduction Raising tobacco prices via increased taxation may be undermined by tobacco industry tactics to keep budget cigarettes on the market. Price differentials between budget and premium cigarettes allow smokers to trade down in the face of average price rises thus attenuating health benefits. This study examines global trends of price differentials and associations with taxation. Methods Ecological analysis of country-level panel data of 195 countries' price differentials was performed and compared against total, specific excise, ad valorem and other taxation. Price differentials were expressed as the difference between budget cigarette and premium pack prices (as % of premium pack prices). Two-level linear regression models with repeated measurements (2014, 2016 and 2018) nested within each country assessed the association between country-level taxation structures and price differentials, adjusted for year, geographical region and income group. Results Worldwide, median price differential between budget and premium 20-cigarette packs was 49.4% (IQR 25.9%-70.0%) in 2014 and 44.4% (IQR 22.5%-69.4%) in 2018 with significant regional variation. The largest price differentials in 2018 were in Africa, with the lowest in Europe. Total taxation was negatively associated with price differentials (-1.5%, 95% CI -2.5% to -0.4% per +10% total taxation) as was specific excise taxation (-2.5%, 95% CI -3.7% to -1.2% per +10% specific excise tax). We found no statistically significant association between ad valorem taxation and price differentials. Conclusion Total levels of taxation and specific excise taxes were associated with smaller price differentials. Implementing high specific excise taxes may reduce price differentials and improve health outcomes.

Automated summary

This study examines the global trends of price differentials between budget and premium cigarettes and their associations with taxation. The results show that the implementation of higher total and specific excise taxes is associated with smaller price differentials. However, there is no statistically significant association between ad valorem taxation and price differentials. This suggests that increasing specific excise taxes can reduce the price differentials and improve health outcomes. The study also finds significant regional variations in price differentials, with the highest differentials in Africa and the lowest in Europe.