Currently, about 430,000 people smoke in El Salvador, roughly half of them will die from tobacco consumption. A significant proportion of young Salvadorans (one in ten) consume tobacco, which typically translates into higher healthcare costs and, for many, illnesses that will disable them and / or lead to death. Every year, about 1,600 people die in El Salvador as a result of tobacco consumption, which costs El Salvador approximately $840 million annually.
Tobacco taxes in El Salvador are amongst the lowest in the Americas, and well below the minimum threshold suggested by the World Health Organization (WHO). A recent study published in the journal Tobacco Control finds that a 10% increase in the price of cigarettes would lead to a decrease in demand of 8%.
A recent simulation exercise finds that increasing the current tobacco tax share of 45% to 63% (still below the WHO threshold) would reduce the number of cigarettes sold by 40% in only five years. The number of smokers would be reduced by 75,000, thereby saving about 17,000 lives (in only five years). Annual tobacco tax revenue would increase by 43% in real terms to about $54.7 million in 2025.
Tobacco taxes are the most cost-effective tool for reducing tobacco consumption. Increasing tobacco taxes is a win-win-win because tobacco-related mortality falls; health expenses associated with tobacco consumption decrease; and increases in tax revenues can be used to treat other diseases or to reinforce public policies that improve the quality of life of individuals. El Salvador needs these resources, and tobacco taxes can help yield them.