Cigarette excise tax structure and cigarette prices in nine sub-Saharan African countries: evidence from the Global Adult Tobacco Survey

Background: Economic theory predicts that the excise tax structure influences the distribution of cigarette prices. Evidence shows that uniform specific excise tax structures exhibit the least price variability relative to other tax structures. The distribution of cigarette prices under different excise tax structures has never been examined for a group of African countries.

Objectives: To examine the distribution of cigarette prices under different tax structures in nine African countries and to critically evaluate the effectiveness of African regional tax directives in promoting public health.

Methods: Data from the Global Adult Tobacco Survey, conducted in eight African countries during 2012-2018, and data from the 2017 Gambia Tobacco Survey were used to construct survey-derived cigarette prices. The coefficients of variation and skewness of the price distribution were compared in the context of each country's cigarette excise tax structure.

Results: The least price variability is found in countries with a uniform specific tax, or a mixed system with a minimum specific floor. Cigarette price variability is largest in countries with uniform ad valorem tax structures. Three of the four countries with ad valorem tax structures are in regional blocs, where the tax directives specify that they should implement an ad valorem structure.

Conclusions: Regional tax directives that require the adoption of uniform specific excise taxes, or high minimum specific floors, could be an efficient way to get multiple African countries to adopt a tax structure that reduces substitution possibilities in response to excise tax increases.