On 15th December 2021, Timor-Leste determined that it would increase tax on tobacco products, effective January 2022. The excise tax will increase from 21% (USD 19/kg) to 50% (USD 50/kg), and there will be import and sales taxes of 2.5% each. Increases will be implemented on all forms of imported tobacco products.
“Raising tobacco taxes significantly reduces premature mortality and cuts health care expenditures,” said Tara Singh Bam, Director of The Union Asia Pacific. “As the world emerges from the pandemic it is time to reflect on lessons learned and prevent future health catastrophes by making policy changes that invest in health.”
The Union facilitated these important tax increases through its August 2021 tax policy paper, “Higher Tobacco Taxes for a Healthier Timor-Leste.” Launched at a high-level meeting with representatives from Ministry of Finance, Ministry of Health, World Health Organization and other key stakeholders, the paper helped build policy awareness and political commitment. More specifically, the paper includes 5 key recommendations: 1) Increase the specific excise tax so t it eventually reaches at least 70% of the retail price; 2) Levy the tax per unit (e.g. per stick) as opposed to per weight (kg); 3) Index the excise tax for inflation and for per capita income growth so that cigarettes become less affordable over time; 4) Invest in tax administration and enforcement (e.g., introduce tax stamps, collect data to aid customs with risk profiling; and 5) Commit a portion of the revenue to invest in health, pandemic preparedness, and poverty alleviation.
The tobacco tax increase brings the Ministry of Health closer to achieving the targets for the 2011-2025 national strategic plan to reduce tobacco use to an average of 25% among adults and young people by 2025.
“The Ministry of Health has made great effort to reduce smoking in Timor Leste,” said Director of NCD Ministry of Health, Dr. Frederico Bosco. “Increased taxation of imported tobacco will significantly support our efforts.”
Making cigarettes less affordable through increased tobacco taxation is an evidence-based policy set out in the World Health Organization’s Framework Convention on Tobacco Control (WHO FCTC). It is proven to reduce tobacco use and is considered a ‘win-win’ measure.
Timor-Leste has one of the world’s highest smoking rates. The World Health Organization (WHO) estimates that in 2020, about 35.4% (60.7% of males and 9.4% of females) of the country’s population aged 15 years and older were current tobacco users (approximately 267,900 people). About 60% of these users—or 179 000 adults—use tobacco daily. Cigarettes are the most common form of tobacco used, but smokeless tobacco is also popular, with 19.8% of adults using it daily.
“ANCT welcomes and is committed to support the government’s implementation of this tax increase,” said Sancho Fernandes, Director of Timor-Leste National Alliance for Tobacco Control (ANCT. “At the same time, we also look forward to the adoption of even stronger tobacco control policies that are in line with WHO’s recommended best practices.”