Taxation of cigarettes as a health policy tool: Analysis and evaluation of Turkish practice

The first use of tobacco was for medicinal, therapeutic and recreational purposes. However it began to be consumed as cigarettes and its harm to health was understood in the long run, and consumption of cigarette turned into an area that needs to be struggled. Cigarette consumption imposes a cost not only on the individual consuming it, but also on the society with the negative externality it spreads. Cigarette consumption is a risk factor for many diseases, and 8 million people die every year due to smoking. There are many different policy measures to reduce the demand for cigarettes. Raising taxes on cigarettes is one of these policy measures. Only ad valorem tax, only specific tax or structures in which both tax types are used jointly exist in taxation of cigarettes. Turkey is among the 10 countries with the highest consumption of cigarettes, and there has been a mixed structure in the taxation of cigarettes since 2003. This structure consists of a minimum-based specific tax and ad valorem tax under the name of Special Consumption Tax (SCT). In addition, Value Added Tax (VAT) is collected on cigarettes. While the first purpose of taxation of cigarettes as a health policy tool is to reduce cigarette consumption, the second goal is to protect the total tax revenue. In this way, the income obtained can be used to finance health expenditures or to fight against smoking. In this study using the WHO TaXSiM model, different tax rates (ad valorem, specific, VAT) related to the taxation of cigarettes in Turkey are simulated. In the scenarios created, it has been seen that cigarette consumption can be reduced and total tax revenue can be increased by lowering the ad valorem tax rate and increasing the specific tax amounts (fixed and minimum specific tax) and VAT