A new paper from the Tobacco Control Research Group (TCRG) uses data from 12 African countries to explore how the tobacco industry responds to tax increases.
The research, published in Tobacco Control, looked at individual tobacco companies, the type of producer (including transnationals and domestic companies), and the price segments for both packs and single sticks, to draw their conclusions. The authors identified various tactics used by tobacco companies, which include adopting pricing strategies such as overshifting and undershifting while passing tax increases over to consumers.
This ground-breaking research is the first multi-country study from Africa to analyse tobacco-tax pass-through and look at pricing of single sticks, building on previous research which focused on Columbia. It is also the first study globally which explores the pricing strategies of individual tobacco companies.
As taxation is only effective in reducing tobacco consumption when it leads to higher prices, the authors recommend that governments monitor how the tobacco industry responds to tax changes.
Lead author Dr Zaineb Sheikh, a research associate at TCRG explains:
The transnational tobacco companies talk about Africa as a target for growth, hence tobacco consumption is increasing across the continent, even as it is falling in other regions. Until now, there has been little research to help African governments understand how tobacco companies are undermining tobacco taxes. This is the first multi-country study from the continent, where we have exposed the tactics employed by the individual tobacco companies to either keep their products cheap to grow the market and recruit more customers, or to grow their profits at the expense of government revenues. With this insight, African governments can develop strategies to plan and implement tobacco taxes more effectively, increasing government revenues and reducing tobacco use.