1. The Economics of Tobacco Control the World Bank’s role in the global partnership Joy de Beyer Tobacco Control Coordinator, World Bank
I am honored to be speaking as a member of the UN Interagency Task Force on Tobacco Control, whose members are listed on the next slide.

2. The United Nations Ad Hoc Interagency Task Force on Tobacco Control UN Agencies: FAO, ICLA, ILO, IMF, UNAIDS, UNDCP, UNDP, UNDG, UNEP, UNICEF, UNESCO, UNFPA, UN Secretariat, World Bank, WHO, WIPO Some other key partners: CDC– the US Centers for Disease Control and Prevention, Office of Smoking and Health IDRC - International Development Research Centre (of Canada) USDA - United States Department of Agriculture The UN Foundation
The Framework Convention on Tobacco Control encompasses technical issues in several sectors. Multi-sectoral collaboration is crucial at national and global levels. The United Nations Ad Hoc Interagency Task Force on Tobacco Control created by UN Secretary-General in 1999, is enabling UN agencies to work together with good results. Led by WHO, this task force is made up of 15 UN agencies, along with the International Monetary Fund and the World Bank. Other key partners of this Task Force include the US Centers for Disease Control and Prevention, the Canadian International Development Research Center, the United States Department of Agriculture, and the UN Foundation.
The advantages of working together are already evident: more is being achieved working together, sharing information, data, ideas and expertise, reducing duplication, building on and learning from each others' work. Each agency can focus within its own area of expertise, but together achieve a comprehensive approach that considers all aspects of tobacco control, which is more like the way that national governments view issues.
 Acronyms:
FAO Food and Agriculture Organization
ICLA International Civil Aviation Organization
ILO International Labor Organization
IMF International Monetary Fund
UNAIDS United Nations Joint Programme on HIV/AIDS
UNDCP United Nations Office for Drug Control and Crime Prevention
UNDP United Nations Development Programme
UNDG United Nations Development Group
UNEP United Nations Environment Programme
UNICEF United Nations Children’s Fund
UNESCO United Nations Educational, Scientific and Cultural Organization
UNFPA United Nations Population Fund
United Nations Secretariat
WB World Bank - economics
WHO World Health Organization
WIPO World Intellectual Property Organization

3. Curbing the Epidemic Governments and the Economics of Tobacco Control
 The World Bank's focus is on the economic issues involved in tobacco control. Fears of adverse economic consequences of tobacco control have inhibited many governments from decisive action. The debate on the economic issues has voiced opinions, fears and vested interests, but been short on evidence and facts. In 1999 the Bank published a report that considered carefully the evidence on the economic implications of tobacco control, entitled “Curbing the Epidemic: Governments and Tobacco Control.” The report addresses the issues policy makers most commonly face when contemplating tobacco control policies, especially jobs, government revenues, and smuggling.
The World Bank

4. The bottom line: Modest action by governments could save millions of lives and prevent much disease, including -perhaps especially- among poor people, without long-term harm to most economies.
The bottom line of the report is that modest action by governments could save millions of lives and prevent much disease, including – perhaps especially, among poor people, without long-term harm to most economies. There are of course two countries whose economies are heavily dependent on tobacco, and several others in which one or more regions or areas in the country are tobacco-dependent. But even for these countries, if efforts to reduce the demand for tobacco products were to succeed even half as well as our dreams, it would be a slow transition.
The lives and health of people should not be sacrificed for corporate profits. Livelihoods of many low-income, even very poor people, may in some countries depend on tobacco, and need to be helped – as do the millions of other poor. And of course governments need to weight the situation in their own country – the Framework Convention on Tobacco Control does not seek to coerce anyone, or undermine national sovereignty. But the key point is to make decisions based on sound evidence, not unsubstantiated arguments of those with strongly vested interest, and even if we all globally go forward with great energy etc, the transition will be gradual.

5. Change will be slow. Factors that increase or maintain tobacco use
Change will be slow. Factors that increase or maintain tobacco use rising incomes population growth nicotine addiction consumer choice advertising and promotion The global tobacco market will not just “wither away”.
Even highly successful global tobacco control would only slowly reduce the global market for tobacco. Numerous factors will continue that increase or maintain tobacco use, including rising incomes, population growth, nicotine addiction, consumer choice and advertizing and promotion. The global tobacco market will not just “wither away”. Even in countries with very strong tobacco control measures, tobacco consumption prevalence has not dropped below 20%.

6. This slide shows how only in the high income countries has demand for tobacco fallen, whereas it is stable (or perhaps even rising) in lower income countries.

7. Cigarette price and consumption go in opposite trends Real price of cigarettes and annual per adult cigarette consumption in South Africa
The Bank recommends demand reduction strategies. The most effective demand reduction strategy is raising tobacco prices using tax increases. There is a clear (inverse) relationship between cigarettes prices and consumption. Evidence from country after country shows that consumption rises when real prices fall, and real price increases reduce consumption.
If real prices fall, consumption rises (as in this slide showing data from South Africa before the democratically elected government took power)

8. And as this slide shows for Argentina.

9. Cigarette tax levels are lower in low or middle-income countries
Taxation is one way to raise the price of cigarettes, and discourages use among children and people with lower incomes particularly. Cigarette tax levels in low and middle-income countries tend to be much lower than in high income countries, and since consumption responds more strongly to price, tax increases tend to be particularly effective in these lower-income countries.
There is considerable scope in many to raise these taxes and prices. This will boost tax revenues, and reduce consumption – a gain for the treasury, and for public health.
Source: Authors’ calculations

10. Smuggling is a big problem
Smuggling is a big problem. High taxes and price differentials provide an incentive to smuggle, but other factors are important, e.g corruption Coordinated multilateral tax increases are best Action against smuggling is a priority
Concerns have been raised that higher tobacco taxes leads to increased smuggling. Smuggling is a big problem, and large differentials in taxes and prices provide an incentive to smuggle. But, it must be emphasized that other factors besides tax -- notably corruption -- are also important causes of increased smuggling. The Bank found that tobacco smuggling tends to drop in line with the degree of transparency within a country. Coordinated multilateral tax increases and strong action against smuggling are a priority.

11. Tobacco smuggling tends to rise in line with the degree of corruption Smuggling as a function of transparency index
This slide shows that the higher the general level of corruption in a country, the more smuggling of cigarettes (and other goods) there is. So smuggling levels are at least as much a function of general corruption, as they are of price or tax differentials. There are some countries with very high taxes and prices – much higher than neighboring countries, but with very low smuggling, and conversely some countries with relatively low prices and taxes where smuggling is rampant.
Source: Merriman and others, background paper

12. Tobacco consumption appear to be rising very strongly among low-income people in several countries. Tobacco products can claim a significant share of monthly expenditures – at a very high opportunity cost. The money could instead be spent on food, or clothing, or school fees….

13. Cigarette tax revenue can provide an important source of income to governments, even at high tax and price levels. In Sweden, excise tax revenue continued to rise while tobacco consumption decreased by a third. Higher tax rates mean higher revenues and lower consumption.

15. Concern has been expressed about the effect of tax increases on the poor. In many countries, smoking prevalence tends to be highest among groups with the least education and lowest incomes, so they are bearing a large additional burden of ill health and mortality because of smoking. It also seems that these are the people who respond most strongly to price increases, and hence could realize large health gains.

16. Governments, multilateral agencies, NGOs and citizens could together save millions of lives and improve health, by reducing use of tobacco products.
The World Bank is already working with many governments to support tobacco control within a sound economic framework, including supporting economic studies on the economic impact of tobacco control. The Bank would be pleased to work with other countries as well. The Bank works closely with sister agencies, especially the World Health Organization and International Monetary Fund, in global, interagency partnerships to ensure the multisector perspective necessary for sound economic and social policies to reduce tobacco use and the deaths and disease that result. These partnerships can provide useful support to the multisector actions of governments as they participate in the Framework Convention for Tobacco Control, and help ensure that policy makers have the needed evidence and information to make sound informed choices about tobacco control in own countries.