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Effectiveness of Tobacco product taxation systems in ECOWAS member countries : Tax incidence Approach

Taxation is considered the most effective way to reduce the consumption of tobacco products. The World Health Organization (WHO) advocates, for effective tax policy on these products that excise taxes represent at least 75% of the selling price. The ECOWAS countries still have shares of all taxes in the sales price which do not reach 40%. Substantial increases in these taxes could allow them to significantly increase these shares. The new ECOWAS directive, adopted in December 2017, provides, in this sense, a set of measures including an increase in taxes with a mechanism for their regular increase, the introduction of a specific excise tax and the removal of the ceiling on the rates to apply. However each country has a maximum level of tax revenue that it can collect given its wealth; its level of taxation, the efficiency of its administration and its political stability. Thus, before implementing a new tax or increasing the rate of those that exist, each country must analyze the gap between its actual levels of collected revenue and the maximum revenue it can collect. If a country is near its maximum level of taxes, its anti-tobacco fight should be focused mainly on non-tax measures and improving the productivity of the tax administration. On the other hand, if a country is far from its tax capacity, its measures should focus mainly on substantially increasing taxes. It is with the aim of informing this definition of priorities in the fight against tobacco in ECOWAS countries that CRES conducted a research entitled «Effictiveness of tax systems for tobacco products in ECOWAS countries: tax frontier approach «. This policy brief reports on the key results that have resulted.

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