Tobacco Excise Tax Simulation Model for Nigeria: Forecasting the Impact of Increased Cigarette Excise Taxes on Public Health and Fiscal Outcomes

This report presents the findings of a tobacco excise tax simulation model examining the potential effects of increasing cigarette taxes in Nigeria. The model assesses how changes in the specific excise tax would influence cigarette retail prices, tobacco consumption, government tax revenues, and the number of tobacco-related deaths averted. The analysis situates the findings within Nigeria’s macroeconomic context and tobacco control landscape to better understand the effectiveness of existing excise tax policies.

The results show that recent tobacco tax increases in Nigeria have been largely ineffective in raising retail cigarette prices or reducing consumption. This is primarily due to the failure to adequately adjust excise taxes for inflation and economic growth, which has resulted in cigarettes becoming more affordable over time despite nominal tax increases. Additionally, high inflation and ongoing currency depreciation have further weakened the real impact of existing tax measures.

Drawing on international best practices and modelling results, the report recommends a significant increase in the specific excise tax on cigarettes. It further proposes a phased policy approach: implementing a substantial increase in the first year followed by sustained tax adjustments in subsequent years that exceed inflation and income growth. Such measures would reduce tobacco consumption, improve public health outcomes, and strengthen government revenue generation.