Why pricing matters
Tax increases on tobacco products that result in price increases are widely considered the single most effective intervention to reduce tobacco use.
Although tobacco is addictive, users respond to price increases by reducing the amount they consume or by quitting altogether. Because youth are particularly price-sensitive, tobacco tax increases are also effective in preventing youth from starting to smoke. Research shows that a 10% increase in price results in a 4% drop in total consumption in higher-income countries and a 6-8% decline in lower-income countries.
What Nova Scotia can do to reduce tobacco use
- Introduce a tobacco manufacturing licensing fee. Introducing an annual licensing fee for tobacco manufacturers is a cost-neutral way for the province to fund programs to prevent, reduce and stop tobacco use in the province. A tobacco industry license fee could recover the costs of implementing the province’s tobacco-control strategy directly from tobacco manufacturers, enabling the government to increase investments in tobacco control without added cost to the provincial treasury.
- Municipalities have a role to play in raising the price of tobacco. Nova Scotia’s Municipal Government Act (MGA) gives municipalities the right to require tobacco retailers to obtain municipal licenses (these would be in addition to the provincial license.) Smoke-Free Nova Scotia recommends that municipalities require tobacco retailers to obtain municipal licenses, and use their licensing systems to reduce smoking by increasing tobacco prices and restricting where tobacco can be sold.
- Close the Roll-Your-Own Loophole in the Provincial Tobacco Tax. Nova Scotia currently taxes roll-your-own tobacco at less than half the rate of regular cigarettes. One hundred grams (100g) of roll-your-own tobacco makes the equivalent of one carton of cigarettes, but the provincial tax on 100g of roll-your-own tobacco is only $15.00 (compared to $33.04 for a carton of cigarettes). Roll-your-own cigarettes are just as dangerous as other cigarettes. The lower tax rate makes it tempting for people to switch to roll-your-own tobacco when prices rise, rather than cut back or quit. To close this loophole and encourage quitting, 100g of roll-your-own tobacco should be taxed at the same rate as a carton of cigarettes.
Resources: SFNS tobacco manufacturing licensing fee position
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