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Table 3 Simulated tax effects on consumption, revenue and number of smokers in Saudi Arabia

From: The introduction of tobacco excise taxation in the Gulf Cooperation Council Countries: a step in the right direction of advancing public health

  Model predictions
Year 1 Year 2 Year 3
Average cigarette pack price (SAR) 38 40 41
Average total tax per pack 30 33 33
Average excise per pack 23 31 31
Change in price per pack 44% 8% 1%
Change in average excise per pack 88% 33% 1%
Import duty as % of final price 13%
Excise tax as % of final price 62% 76% 76%
Total tax as % of final price 80% 81% 81%
Assume: e (premium) = −0.2; e (mid-price) = − 0.3; e (economy) = − 0.4
Change in number of smokers - 5% −2% -0.3%
Change in prevalence - 1% -0.4% -0.1%
Change in sales -11% −4% −1%
Change in excise revenue 67% 27% 0%
Change in VAT revenue 28% 3% 5%
Change in import duty revenue -11%
Change in total tax revenue 44% 4% 0.2%
Change in industry revenue -10% −2% −0.3%
  1. Simulations are performed using the tax simulation model developed by the WHO (WHO TaxSim), with 2018 as the baseline year. Estimations are based on Euromonitor data for Saudi Arabia for December 2017 and government sources. VAT Value added tax, SAR Saudi Arabia currency in Rials (1 SAR ~ US $0.27); e: own price elasticity of demand for premium, mid-price and economy brands