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How much the government can earn from tobacco tax?

The Secretary-General of the Iranian Anti-Tobacco Association requested the Iranian National Tax Administration to levy a 75% tax on tobacco retail price.

Dr. Mohammad Reza Masjedi said that the Tax Administration overlooks the fact that in current economic conditions, significant amounts of money can be transferred to the treasury from tobacco taxation and that increasing the tax on tobacco is one of the most important ways to reduce consumption.

He stated that we are asking the Tax Administration to increase the tobacco tax rate annually for 10% as it was stated in the Comprehensive Tobacco Control Act of Iran or to levy a 75% tax on retail price as recommended by the WHO. He stated that unfortunately not only there is not a 10% annual increase, but also the tax collected on tobacco is a detriment to the buyers and a benefit to the mafia of the tobacco industry.

Dr. Masjedi quoted the statistics from the Tax Administration and said that there are some increases in the collected tax on tobacco, but these increases are because of the increase in the tobacco price, not the tax rate.

He said that according to the calculation of Tax Administration, in the year 2020 we will have a 40,000 billion IRR increase but it is still way less than the 200,000 billion IRR. This is while in the current situation of the country under heavy sanctions, it would have a great effect on the required budget for public health.

He explained that last year WHO announced that Turkey had a tax revenue of 46 billion Turkish lira of tobacco tax, which is almost equivalent to 920,000 billion IRR, while there are more cigarette smokers, tobacco manufactures, and smuggling in their country but taxation of this harmful product is being seriously followed by their government.

He said that there is a simple formula for calculating the tobacco tax that shows it is only 10% in Iran, way less than from the 75% recommended by WHO.

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