on tobacco taxes and prices. • Review of impact of tobacco taxation on tobacco … •Myths and realities about economic impact of increased tobacco taxation … FACTSHEET: TOBACCO TAXATION Progressive vs. Regressive: Many commentators assume that tobacco taxes are regressive, since in many countries smoking rates are higher …

The Case for Tobacco Taxation: If current smoking trends continue, as many as 650 million people alive today will die from diseases related to smoking1. International literature has established that raising taxes on tobacco products provides gov- ernments with a substantial and reliable increase in revenues that can be used, ngs, to cover the cost to society of tobacco use2. It has also been demonstrated that the single most effective way of reduc- ing tobacco use is through high prices. It is thus important to ces are high enough to serve as a real deterrent making tobacco products ever more unaffordable (raising prices beyond in- flation and increases in incomes)…. Prepared by HealthBridge Canada 1 Nicholas St., Suite 1105 Ottawa K1N 7B7 www.healthbridge.ca The Canadian Experience: Canada has a long history of implementing tax increases and decreases. Between 1982 and 1992, the Canadian government increased tobacco taxes by 500%, which caused a ificant 40% decline in per capita consumption of cigarettes3. Among youth, daily smoking prevalence declined by 60%4. At the same time, federal and provincial tax revenues increased by 240%5. However, in response to an increase in illegal ling (mainly from the the Government of Canada drastically reduced tobacco taxes in an control the smuggling. As Figure g 1994 tax revenues sharply decreased and then gradually rose as taxes were slowly increased after 1994. The lowering of tax revenues after 1994 was accompanied by a sharp increase in cigarette consumption and consequently, health damage caused by smoking, as experienced in Canada and other countries6. Figure 1. Total Federal & cial Tobacco Revenues in Canada

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