HTP Tax Gap Map: Glossary | Campaign for Tobacco-Free Kids
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Excise tax

Excise taxes are narrowly based taxes on consumption, levied on particular goods, services, and activities. They can be either a per unit tax (such as per gallon on gasoline, per cigarette stick) or a percentage of price. Generally, excise taxes are collected at the producer or wholesaler stages of production, and are embedded in the price paid by final consumers.

Ad-valorem excise tax
Ad-valorem excise taxes are a type of excise tax applied as a percent of the value of the commodity. Generally, the tax base for ad-valorem excises is determined at the producer level (“ex-factory price”) or wholesaler level (wholesale price). Nevertheless they can also be applied at the retailer level (retail sales price).

For example: 65% of the ex-factory price, or 20% of the retail sales price of a pack of cigarettes.

Specific excise tax
Specific excise taxes are a type of excise tax levied as a fixed monetary amount per a given measure or quantity (e.g., units, weight, milliliters) of certain goods.

For example: a tax of $1 per 20 sticks of cigarettes, or a tax of $50 per kg of tobacco.

Heated tobacco products (HTP)

See our fact sheet on HTPs: Definition and Global Market.

Heated tobacco products defined in the tax code?

We say that a country has “defined HTPs in the tax code” if the tax code has been amended to explicitly include the tobacco used in HTPs, regardless of whether the amendment defines them as sticks, pods, or tobacco mixture in a new tobacco tax category, or simply use an existing tobacco tax category (e.g., “other tobacco products”).  

Purchasing Power Parity (PPP)

Purchasing power parity is the rate at which the currency of one country would have to be converted into that of another country to buy the same amount of goods and services in each country. 

International Dollars ($PPP)

Reporting prices in International Dollars ($PPP) allows users to compare the price of tobacco products between countries.

Each country reports its data in its own currency. Therefore to compare the prices of a given product or service, each country’s price statistics must be converted into a common currency to better reflect the purchasing power of the good for a typical consumer. There are several ways to do that conversion. To convert each country’s tobacco product prices into a common currency reflecting their PPP, we use the purchasing power parity conversion factor (local currency units (LCU) per international dollar, 2020 projected rate published in the October 2019 IMF World Economic Outlook). 

Retail selling price (RSP)

Retail selling price is the price at the point of sale to the consumer inclusive of all mark-ups and taxes. In some countries of regions (e.g., European Union), it is also called the tax-included retail selling price (TIRSP).

Tax base

Tax base is a unit of measure describing the quantity of a certain good used to define specific taxes (e.g., volume, number of units, weight).

For exampleThe tax base of a specific excise tax of 100 EUR per 1000 cigarette sticks is number of units. The tax base of 100 EUR per kilogram of tobacco is weight of tobacco mixture.

Tax burden 

Tax burden is the ratio of the tax to the final retail sales price. It is expressed as a percent of the final retail sales price (inclusive of all taxes and markups). The WHO generally refers to two types of tax burdens: the excise tax burden, and the total tax burden.Please note that the maps reflect excise tax burden, not total tax burden.

Excise tax burden
The excise tax burden is the ratio of the sum of excise taxes to the final retail sales price.

For example: an excise tax burden of 50% means that the sum of all excise taxes makes up half of the final retail sales price.

Total tax burden
Total tax burden is the ratio of the sum of all sales taxes (inclusive of excise taxes, customs or import duties, VAT, and other sales taxes or surcharges) and the final retail sales price.

Tax gap 

The tax gap is the number of percentage points difference between the excise or total tax burdens on cigarettes and the excise or total tax burdens on heated cigarettes. The larger the tax gap, the smaller the tax burden on HTP relative to cigarettes. The tax gap may be negative if the tax burden on HTP is larger than that on cigarettes. 

For example: a country with a 50% excise tax burden on cigarettes and a 40% excise tax burden on HTPs would have a tax gap of 10 percentage points (p.p.)

1 WHO Report on the Global Tobacco Epidemic, 2019. Geneva: World Health Organization; 2019.