Article 6 of the Tobacco Convention calls on countries to use tobacco taxes as a means of reducing tobacco consumption. High prices are particularly effective to influence young people’s use of tobacco.
To comply with Article 6 of the Tobacco Convention, Parties of the Convention are committed to:
- Impose taxes and influence price formation to reduce tobacco use.
- Restrict travelers purchases and import of tax-free tobacco products.
The Guidelines for Article 6 state that young people are twice to three times more responsive to price changes than older people. Therefore, tax increases will reduce tobacco use initiation and tobacco consumption among young people as well as the risk that they can’t stop using it.
The guidelines point out that low- and middle-income earners are more sensitive to tobacco price changes than high-income earners. From a public health perspective, higher taxes lower consumption of tobacco, especially among low-income earners, and will, thereby, reduce the morbidity and mortality rates in the population. In Sweden, cigarette addiction is more common among women and men with low incomes, according to a survey from CAN, the Central Association for Alcohol and Drug Education. Among women, snus addiction is most common in the low-income category, but among men snus addiction is most common among middle-income earners.
The guidelines point out that tobacco taxes both reduce consumption and raise government revenue which can be used to cover part of the social costs caused by tobacco use.
The guidelines for Article 6 include a number of recommendations for putting the article into practice:
- Parties should design their tax systems for tobacco products in a way that taxes can be adapted to inflation and changes in purchasing power with the aim of continuously reducing tobacco consumption.
- The Parties shall establish a tax system adapted to achieving both public health and fiscal objectives. It is preferable to apply specific excise taxes charged per quantity, such as per cigarette pack, regardless of price.
- The tax system must be monitored and adjusted regularly.
- All tobacco products shall be taxed in a similar way to avoid that some tobacco products benefit from the taxing scheme. By that, the system will not inadvertently encourage consumers to choose cheaper products within the same product category.
- The tax system must be transparent and shall be supervised effectively.
- The Parties shall facilitate tax controls. They shall, inter alia, have systems in place to make it more difficult for manufacturers and importers to increase stocks in anticipation of tax increases to take advantage of the current lower tax.
- When appropriate, the parties may claim fiscal markings on packs of tobacco products.
- The Parties shall ensure that there is an effective supervisory system and cooperation between the authorities involved, such as tax and customs authorities.
- The Parties should consider using earmarked tobacco taxes to be used for financing tobacco control measures.
- The Parties should consider prohibiting or severely restricting tax-free or duty-free sales of tobacco products to international travelers.