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Tonga’s tobacco taxes

By Sutayut Osornprasop

All four major non-communicable diseases (NCDs) – diabetes, cardiovascular disease, cancer, and respiratory diseases – in Tonga are on the rise. According to the latest WHO data, NCDs accounted for four out of five leading causes of deaths in Tonga, which is among the highest in the Pacific.

Risky behaviours such as smoking, poor diet, harmful alcohol intake, and physical inactivity are acknowledged as the major contributing factors to the increase of NCDs in Tonga. Almost one in two men smoke, and smoking also appears to be increasing among young women in Tonga.

In response to rising NCD rates, the Tongan government has gradually introduced taxation measures aimed at reducing the consumption of unhealthy products. In mid-2013, the excise tax on cigarettes was increased from TOP 210 (US $91) per 1000 cigarettes or per kilogram to TOP 250 (US $109) for imported cigarettes, and TOP 200 (US $87) to TOP 238 (US $104) for locally manufactured tobacco/cigarettes, and the tobacco concession for inbound travellers was reduced from 500 cigarettes to 250 cigarettes.

In July 2016, the government further increased taxes on imported cigarettes by nearly 50 percent to TOP 380/1000 sticks, compared with TOP 255/1000 sticks in the previous year.

As per the figure below, cigarette sales have dropped in both years the government imposed the tax increases. However, sales rebounded in 2014-5 and 2015-16, when there were no significant changes to the tobacco tax rates. This may indicate that the increase in 2013-14 was not large enough.

Cigarette sales: volume and growth

The tax hike has also proven powerful enough to change the market share of major cigarette brands in Tonga, with a significant number of smokers having simply replaced more expensive imported cigarettes with cheaper, locally-manufactured cigarettes. As per the figure below, tax increases imposed on imported cigarettes from July …read more

From:: Development Policy Centre – DEVPOLICY Blog

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