CONFERENCE PROCEEDING
How has the tobacco industry passed tax changes through to consumers in 12 Sub-Saharan African countries?
 
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1
Tobacco Control Research Group, University of Bath, Bath, UK
 
2
School of Management, University of Bath, Bath, UK
 
3
Research Unit on the Economics of Excisable Products, School of Economics, University of Cape Town, Cape Town, South Africa
 
 
Publication date: 2023-04-25
 
 
Corresponding author
Zaineb D. Sheikh   

Tobacco Control Research Group, University of Bath, Bath, UK
 
 
Tob. Prev. Cessation 2023;9(Supplement):A3
 
KEYWORDS
ABSTRACT
Introduction:
Tobacco taxation is the single most effective tobacco control policy that reduces affordability and consumption; however, it is only effective in reducing tobacco use when increase in taxes is translated into higher prices. Empirical evidence suggests that the tobacco industry (TI) weakens the effectiveness of taxes by employing a range of targeted pricing tactics.1-4 This study therefore aims to investigate the TI’s price-based response to taxation and tax pass-through to consumers, both for cigarette packs and single-sticks, in Sub-Saharan Africa (SSA) countries. This is the first multi-country study from Africa that looks at industry’s pricing strategies in 12 countries simultaneously (Botswana, Ethiopia, Lesotho, Madagascar, Malawi, Mozambique, Namibia, Nigeria, South Africa, Tanzania, Zambia, Zimbabwe) and also the first study that includes the pricing for single-sticks in Africa.

Methods:
The study used the most recent African Cigarette Prices (ACP) Project datasets (2016-2020)5 for 12 SSA countries, along with taxation information from the WHO’s Global Tobacco Epidemic Reports (GTR).6 The TI's pricing strategies were examined, and differentiated according to brands, producers and price segments.

Results:
Tax increases on cigarettes (both packs and single-sticks) were not linearly passed on to the consumers in the 12 SSA countries examined, and the TI was found to employ differential tax shifting practices whereby taxes were either overshifted (price increased more than the tax increase) or undershifted (absorbed some of the tax increase) or a mix of both the patterns was observed.

Conclusions:
This paper provides a general description of the TI pricing strategies in response to tax increases in SSA countries and provides policy recommendations that will be helpful for the particular countries examined and also other countries in similar situations for the effective implementation of targeted regional tax directives. The results suggest there remains scope for further tax increases in SSAs. Consequently, there is a critical need for key data and more country-specific analysis, independent and peer-reviewed research to buttress these findings and inform national policies.

This abstract has not been published or presented before in any other conference or communication material.

CONFLICTS OF INTEREST
JRB owns 10 shares in Imperial Brands for research purposes. The shares were a gift from a public health campaigner and are not held for financial gain or benefit. All dividends received are donated to health-related charities and proceeds from any future share sale or takeover will be similarly donated.
 
REFERENCES (6)
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Sheikh ZD, Branston JR, Gilmore AB. Tobacco industry pricing strategies in response to excise tax policies: a systematic review. Tobacco Control 2021.
 
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Gilmore AB, Tavakoly B, Taylor G, et al. Understanding tobacco industry pricing strategy and whether it undermines tobacco tax policy: the example of the UK cigarette market. Addiction 2013;108(7):1317-1326.
 
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van Schalkwyk MC, McKee M, Been JV, et al. Analysis of tobacco industry pricing strategies in 23 European Union countries using commercial pricing data. Tobacco control 2019;28(e2):e102-e109.
 
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Ross H, Tesche J, Vellios N. Undermining government tax policies: common legal strategies employed by the tobacco industry in response to tobacco tax increases. Preventive medicine 2017;105:S19-S22.
 
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Darsamo AV, Ross H, Woolfrey L. The Data on Alcohol and Tobacco in Africa (DATA) project. Tobacco Induced Diseases 2018;16(1).
 
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Organization WH. WHO report on the global tobacco epidemic, 2021: addressing new and emerging products: World Health Organization 2021.
 
 
CITATIONS (1):
1.
Tobacco industry pricing strategies during recent tax adjustments in Mexico: evidence from sales data
Belen Saenz-de-Miera, Kevin Welding, Tuo-Yen Tseng, Graziele Grilo, Joanna E Cohen
Tobacco Control
 
eISSN:2459-3087
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