Making cigarette taxes more effective in Mozambique: A simulation analysis using the Tobacco Excise Tax Simulation...

Area of Science:

• Public Health
• Health Economics
• Tobacco Control Policy

Background:

• Cigarette price tax shares in Mozambique are significantly lower than the Southern African Development Community average.
• Current tax shares are 14.7% (excise) and 28.5% (total) for the most-sold brand, compared to regional averages of 36.7% and 51.6% respectively.

Purpose of the Study:

• To simulate the impact of substantial cigarette excise tax increases on prices, tax shares, consumption, tax revenue, and smoking prevalence in Mozambique.
• To evaluate three distinct tax increase scenarios between 2023 and 2028.

Main Methods:

• Utilized the Tobacco Excise Tax Simulation Model (TETSiM).
• Simulated three scenarios: Scenario 1 (legislated increases + 4% annually), Scenario 2 (inflation + income growth + 30% annually with full tax pass-through), and Scenario 3 (Scenario 2 tax adjustments with tax over-shifting for specific brands).

Main Results:

• By 2028, Scenario 1 shows a decrease in excise tax share to 13.9% and total tax share to 27.7%.
• Scenarios 2 and 3 project significant increases in excise tax share (40.2% and 35.8%) and total tax share (53.9% and 48.1%) respectively.
• Smoking prevalence is projected to decrease in Scenarios 2 (to 8.23%) and 3 (to 8.08%) compared to Scenario 1 (9.77%).
• Scenario 2 is expected to yield the highest total tax revenues, with a 173% increase.

Conclusions:

• Substantial cigarette excise tax increases are crucial for improving public health and fiscal sustainability in Mozambique.
• Current tax policies are insufficient to curb smoking prevalence or significantly increase tax revenue.
• Policy reforms aligning with Scenario 2 or 3 are recommended to achieve desired public health and economic outcomes.