ATAF launches project on Tobacco Taxation in Africa

by Trevor Lutalo
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The African Tax Administration Forum (ATAF) is partnering with the Bill and Melinda Gates Foundation (BMGF) to launch a project that will concentrate on tobacco taxation. This initiative acknowledges the crucial role of domestic revenue mobilisation (DRM) in funding the Sustainable Development Goals (SDGs) and the African Union’s Agenda 2063. The primary objective of this project is to optimize tobacco tax policies and administration throughout the continent.

ATAF has issued a statement that highlights the findings of the African Tax Outlook, which show a lower tax-to-GDP ratio in Africa when compared to other regions. In an effort to improve domestic revenue mobilization (DRM), ATAF proposes the implementation of improved tobacco tax policies. This would result in a significant increase in revenue without imposing excessive economic burdens on taxpayers or distorting market dynamics.

This project highlights the important link between effective taxation on tobacco products and key development objectives, such as SDG 3 and Agenda 2063 Goal 3. These objectives prioritize promoting healthier lives and well-being for the citizens of Africa. According to a report by the World Health Organization (WHO) in 2019, a 50 percent increase in the price of tobacco products through tax increments could prevent around 27.2 million premature deaths worldwide over a period of 50 years.

Relying on the commitment of BMGF to global health and welfare, the initiative aims to reduce tobacco’s adverse health effects while increasing domestic revenue in Africa.

The project aims to clarify the reasons behind giving priority to tobacco taxation. It highlights three key factors. Firstly, the World Health Organization (WHO) has provided alarming statistics that indicate tobacco is the primary preventable cause of death worldwide. This underscores the need for concerted efforts to reduce its consumption.

Secondly, there is solid evidence that taxation can effectively decrease tobacco consumption, especially when prices are raised. According to the World Health Organization, significant tax increases could prevent millions of premature deaths worldwide, highlighting the crucial need for strong taxation policies.

Finally, the project emphasizes the importance of tobacco taxation in domestic resource mobilization efforts. This is because there is a significant difference between Africa’s tax-to-GDP ratio and that of the OECD. The use of excise taxes, in particular, shows potential for both generating revenue and promoting public health.

In the future, the initiative plans to broaden its scope to include other harmful products such as alcoholic beverages and sugary drinks, which will also fall under the excise tax regulation. The project aims to promote collaboration among policymakers, tax administrators, and civil society stakeholders who are committed to tobacco control. By doing so, it hopes to create a more prosperous and healthier Africa.

Key policy and tax administration Issues covered in the project

1.Tax Policy Development: ATAF will assist tax administrations in designing effective tax structures and rates through toolkits, aiming to optimise the impact of excise taxes.

2. New Tobacco Products: With the emergence of new tobacco and nicotine products like electronic cigarettes and heated tobacco, ATAF aims to ensure these products are effectively taxed and regulated across African countries.

3. Illicit Trade: Recognizing the detrimental effects of illicit trade in tobacco products, ATAF will help African countries develop measures to combat this issue, safeguarding revenue and public health.

4. Tax Administration Challenges: ATAF will address challenges faced by tax administrations, including monitoring compliance by the tobacco industry and conducting audits, to enhance effectiveness in tobacco taxation implementation.

5. Technology Implementation:Leveraging advancements in tax technologies such as production monitoring and track-and-trace systems, ATAF will assist African tax administrations in deploying effective tax technologies.

The project encompasses several pivotal activities such as researching and analyzing the existing tobacco taxation policies, imparting training programs to enhance capacity building, creating technical assistance materials like policy briefs and toolkits, providing hands-on support in policy design and implementation, monitoring and evaluating policy effectiveness, and sharing knowledge through disseminating findings and best practices.

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