Effectiveness of Tobacco Product Taxation Systems in ECOWAS Member Countries: Tax Incidence Approach

Increasing taxes is considered the most effective measure to reduce the consumption of tobacco products. To enable taxation to play this role, ECOWAS adopted a new Directive on the taxation of tobacco products in December 2017. It provides a set of measures including a rise in taxes with a mechanism for regular rate increases. The resulting tax revenue will be paid partly by the consumer and partly by the producer. The higher the consumer share, the more the increases can discourage consumption and the more effective the tax system. However, this mechanism only works if the tax increases are shifted by the manufacturer to the consumer and the latter is sensitive to the price of tobacco. In order to analyze the impact of these two factors in the ECOWAS countries, CRES undertook a research entitled «Effectiveness of tax systems for tobacco products in ECOWAS countries: tax incidence approach. This policy brief shows the main findings of the research on the transmission of tax increases to the consumer of tobacco products