Taxation of tobacco products
Tobacco taxation is a tool that enables the government to increase health funding and reduce tobacco consumption.
Every year, tobacco causes economic losses in terms of healthcare costs and lost productivity. Raising tobacco taxes could generate additional revenues of around $101 billion USD for governments.
Taxation on tobacco products in the DRC currently accounts for 52.11% of the retail price of cigarettes. This does not meet the WHO recommendation of at least 75%, indicating there is a need for improvement.
According to the World Health Organization (WHO) technical manual on tobacco tax policy and administration, progressive increases in excise taxes and tobacco prices have been shown to be the most effective and cost-effective methods of reducing tobacco consumption.
This recommendation aligns with measures explicitly outlined in Article 6 of the WHO Framework Convention on Tobacco Control (FCTC) and its guidelines.Higher taxes on cigarettes, leading to higher prices, make tobacco less affordable.
Young people and low-income groups are most sensitive to tobacco price increases.This page presents the types of taxes applied to tobacco products, the country’s tobacco taxation score compared with other countries, as well as the tobacco policies and impacts.
Type of tax applied to tobacco products
Taxes are divided into two major categories: direct and indirect.
Direct taxes are imposed on the profit, income, property, or wealth of individuals or companies, while indirect taxes are imposed on the price of goods and services. Indirect taxes are most relevant to the taxation of tobacco products, as they directly influence price.In the DRC, the primary tax applied to tobacco products is excise duty. Excise duties specifically target selected products, such as tobacco, to regulate consumption and generate revenue.
There are two basic types of excise duty:
- Specific – levied in the form of a monetary value per quantity of the product taxed (e.g., 1,000 cigarettes, a pack of 20 sticks, a kilogram of tobacco); and
- Ad valorem – levied as a percentage of the value (e.g., retail price; producer/factory price; or cost, insurance, and freight value) of the taxed product. Tobacco taxation in the DRC is ad valorem.
Both types of excise tax have advantages and disadvantages.
Specific excise duties are generally easier to administer and provide a more predictable revenue stream. They also result in relatively uniform price increases for all tobacco products to which they apply, whereas ad valorem excise duties can create greater price differences between cheaper and more expensive products, even within the same product category.National tax authorities have the potential to generate substantial revenue from tobacco taxes to support universal health coverage. However, in the DRC, the reliance on an ad valorem tax system hinders this potential, falling short of the WHO’s Framework Convention on Tobacco Control (FCTC) best practices.
Tobacco tax policies in the DRC
In 2020, tobacco tax in the DRC was set at 52.11% and remained at that level in 2023.
This tax share is still lower than the WHO recommendation of 75%. The specific excise tax is levied on tobacco products and accounts for 38% of the retail price of a pack of 20 cigarettes. The retail price for a pack of cigarettes from the most-sold brands is 1,000 cdf, approximately $0.51 USD.The WHO FCTC recommends that excise duties make up at least 70% of the retail price of tobacco products to effectively reduce consumption.
However, in the DRC, the excise taxes falls short of this target, making up only 38% of the retail price.For a tax policy to be effective, it must be well-designed, requiring a thorough understanding of the fundamentals of sound tax policy, the strengths and limitations of different tax regimes, and their impact on prices and administration. Equally important is understanding how the country’s tobacco market operates, as it plays a crucial role in shaping the effectiveness of tobacco control policies.
In line with this, the guidelines for implementing Article 6 of the FCTC emphasize that well-crafted tax policies can:
- Reduce tobacco consumption,
- Generate public revenues, and
- Reduce health inequalities.
One of the ways to achieve SDG 3 (Ensure healthy lives and promote well-being for all at all ages) is to increase implementation of the FCTC. WHO encourages all its member states to use tobacco taxes to achieve their health, financial, and equity objectives.
The WHO proposes best practices in tobacco taxation policy, including:
- The implementation of a simple excise tax framework.
- Price increases that are driven more by specific tobacco excise duties.
- Tobacco taxes that are designed to reduce affordability while taking into account the effects of inflation and economic growth.
- Adoption of simple tax systems that do not differentiate according to the characteristics of tobacco products, to limit the incentive for consumers to switch to cheaper brands.
- Implementation of tobacco taxation as part of a broader plan to reduce smoking.
The government of the DRC recognizes the importance of financial and fiscal measures in achieving the objective of the Convention. Article 6.2 (a) of the Convention stipulates that each party shall take into account its national health objectives with regard to tobacco control in the application of “tax and, where appropriate, pricing policies concerning tobacco products in order to contribute to the health objectives of reducing tobacco consumption.”
Tobacco taxation score in the DRC
The overall performance of the cigarette excise tax structure in the DRC is assessed using the international metric, the Tobacconomics Tax Scorecard. This scorecard is based on a 5-point scale (0–5), with the highest score indicating the best tax system and the lowest score indicating the worst. The scorecard evaluates four key criteria: cigarette prices, changes in affordability, tax burden (the share of retail cigarette prices accounted for by taxes), and the tax structure. In 2022, the DRC’s Cigarette Tax Score was 0.88 out of 5.
This score reflects low performance across all assessed criteria: cigarette prices, changes in affordability over time, tax burden, and tax structure. The DRC’s overall score is lower than the African region average score of 1.53, its income group of 1.43, and the global region average score of 1.99, signaling significant room for improvement in its cigarette tax system.The chart below shows the trends for the DRC’s Cigarette Tax Scores to highlight the slight changes in performance of its tobacco tax system from 2014 to 2022. Although the DRC cigarette tax score improved from 0.5 in 2014 to 0.88 in 2020, this score has remained the same for the past three years.
This stagnation is possibly due to the continued affordability of cigarettes in the country. Overall progress remains limited, highlighting the need for more aggressive reforms to enhance the effectiveness of its cigarette tax system.Trends in the overall cigarette tax score in DRC
Source: Tobacconomics, 2022
Tobacco Taxation Country Score (2022)
Trends in the DRC Cigarettes’ Taxation Scorecard and its components
Source: 3rd edition of the Cigarette Score Card (2022), WHO Global Tobacco Epidemic Report (2023), and WHO FCTC Global Progress Report (2023)
The above graph shows that the tax structure on cigarettes (i.e., the way the government applies taxes on cigarettes) in the DRC increased from level 1 in 2014 to level 2 in 2018 and has remained unchanged up until 2022. While the tax share (i.e., the percentage of the cigarette price that comes from taxes) saw slight growth, rising from 0 in 2014 to 1.5 in 2020 and 2022, cigarette affordability (meaning how easy or hard it is to buy cigarettes over time) did not change throughout the period. Despite these tax adjustments, cigarette prices (expressing the cost of a pack of cigarettes in the market) showed minimal movement, indicating that tax policies may not have significantly impacted affordability or consumption.
Impact of tax policy
General impact of tobacco tax policy
WHO’s best practice on tobacco tax policy recommends a relatively simple tax system that applies equivalent taxes to all tobacco products, with the total tax share representing more than 75% of the retail selling price and the excise duty share representing at least 70% of the final retail selling price.
DRC TaxSiM Model: A tool for tobacco tax policy design
The TaxSiM DRC model, developed by the Tax Justice Network Africa (TJNA) and the Consortium for Economic and Social Research (CRES), is a simulation tool designed to support evidence-based policymaking on tobacco taxation in the DRC.
This is similar to the TETSiM model used in other countries; however, it is different as it specifically accounts for a country’s economic structures, public health challenges, and tax administration systems. It does this rather than just focusing on the impact of a change in the excise tax structure, as TETSiM does. It evaluates the fiscal and public health impacts of various tax scenarios, providing critical insights for policymakers and civil society stakeholders.During a workshop held in Kinshasa (December 4-6, 2024), participants were trained to use this model to assess the potential outcomes of revised taxation strategies, such as increased revenue generation, reduced tobacco consumption, and better health outcomes. This model also accommodates analysis of new tobacco products, ensuring comprehensive policy adaptation in a changing market.
By integrating TaxSiM DRC, policymakers can design robust tax structures that not only meet public health objectives but also optimize revenue streams, positioning tobacco taxation as a key driver of fiscal sustainability in the DRC.
