An economic assessment of the World Health Organization’s 75% tobacco tax incidence target

The report assesses the World Health Organization’s recommendation that taxes should account for at least 75% of the retail price of cigarettes. It examines the origins of the target, its application across countries and the economic evidence supporting its use as a tobacco tax policy benchmark. In 2024, 39 of 178 countries in the WHO dataset met the 75% threshold, with countries meeting the target concentrated disproportionately among high-income and EU economies.

The analysis finds that tax incidence—the share of the retail price accounted for by tax—is influenced by factors beyond governments’ direct control, including producer and retailer pricing, product mix and consumer behaviour. Across 174 countries in the 2024 WHO dataset, the report finds a 91% correlation between the tax paid per pack and retail cigarette prices, compared with 49% between tax incidence and retail prices. It also finds relatively weak relationships between tax incidence and cigarette affordability and between tax incidence and smoking prevalence.

The report places these findings in the context of guidance from the WHO, World Bank, IMF and other institutions, which generally emphasises cigarette prices, affordability, externalities and national circumstances rather than a fixed tax-incidence threshold. It concludes that tobacco tax policy should take account of differences between countries in income levels, market structures, consumer behaviour, illicit trade, tax administration and wider fiscal and public-health objectives, rather than applying a single global tax-incidence target.