Impact of taxation on tobacco products prices in Bahrain, Saudi Arabia and United Arab Emirates.

Abstract

Background: In 2016, the 6 Gulf Cooperation Council countries agreed to implement a harmonized excise tax on tobacco products, at a rate of 100% of the pre-tax price.

Aim: To assess the implementation of tobacco taxation in Bahrain, Saudi Arabia and United Arab Emirates and its impact on consumer prices, affordability and substitution possibilities.

Methods: This study conducted simple descriptive analysis of open-source secondary data reported to WHO by Bahrain, Saudi Arabia and United Arab Emirates on cigarette excise taxes, price levels, price dispersion, and affordability.

Results: The 3 countries imposed more than 70% excise tax on tobacco products. Saudi Arabia, in addition, imposed the value added tax. This led to sharp price increases and less affordability in all the countries. In 2020, the affordability index in the Gulf Cooperation Council countries ranged from 1.3% in Kuwait to 3.8% in Saudi Arabia. However, affordability was still higher in these countries than in the rest of the world.

Conclusion: Despite the progress made on tobacco tax reform in the 3 countries, affordability was higher than in other countries, indicating the need for improvements. The tobacco tax system has some weaknesses that need to be addressed in future reforms, for example, the lack of systematic data collection and management systems and the disconnect between the health, tax economics, research, and policy experts.