In February 2020, Ethiopia passed a landmark bill increasing taxes on tobacco products. The tax reform followed last year's comprehensive tobacco control law, which includes a ban on smoking in public and communal areas, a ban on advertising, broad graphic warnings on tobacco packaging, new restrictions on the sale of tobacco products to minors (those under 21 years of age), and new restrictions on the sale of e-cigarettes. With this tax reform, the 75% tax on domestic production costs (or cost, insurance and freight) for imported cigarettes is now a tax on the pack of cigarettes. It becomes the ad valorem part of the excise duty paid upon purchase of the product, this ad valorem part represents 30 %. And to this tax is added a specific excise duty that has just been created and which represents 8 Ethiopian birrs (ETB) (approximately 0.25 USD). It is estimated that the new tax will not only bring an additional 925 million ETB (28.7 million USD) to the State, but will also, through its impact on the price of cigarettes, reduce the smoking rate among adults by 10%. Furthermore, the new tax system for tobacco products should reduce the significant price gaps between cheap cigarettes and premium cigarettes, mitigating the consumption transfer effect and thus reinforcing the positive effects of taxes on health.<\/p>\n
The legislation is expected to increase the tax share of the average retail price of cigarettes to approximately 54%, which is still far from the WHO's recommended minimum of 75%. Higher rates would not only help Ethiopia meet WHO standards but also contribute to further reducing tobacco use.<\/p>\n
This new tax, however, represents a huge victory for public health in Ethiopia and a hope for many low- and middle-income countries facing increasingly affordable tobacco products. The bill's introduction was widely supported by the World Health Organization, the World Bank, and numerous nongovernmental organizations working in Ethiopia and internationally.<\/p>\n