Brazil : Overview of Tobacco Use, Tobacco Control Legislation, and Taxation

Brazil has achieved one of the largest significant declines in age-standardized smoking prevalence since 1990 through a combination of tobacco control policies. Smoking prevalence among adults decreased from 35 percent in 1989 to 18 percent in 2008. In 2006-2017, according to the telephone surveys of the adult population aged 18 years and older living in the capitals of Brazilian states, smoking prevalence further decreased from 16 percent to 10 percent. Smoking prevalence among children also decreased. In 2011, the government proposed a change in the cigarette excise tax system and large increases in excise tax rates. Excise rates were annually increased in 2012-2016; however, the increases in 2014-2016 were rather moderate, and in 2017-2018, the rates were not changed. The decline in legal sales in 2011-2016 was partly compensated by the growth in illicit sales, but, according to the public health expert' estimates, despite some increase in illicit sales, the total cigarette consumption decreased from 125 billion in 2012 to 91 billion in 2017, or by 27 percent in five years. Illicit cigarettes from Paraguay occupy a substantial part of the real cigarette market in Brazil. While total (licit and illicit) cigarette consumption continues to decline in the country, illicit cigarettes slow down this trend. Illicit cigarettes also reduce tobacco excise revenues. However, the experience of Brazil confirms that if the tax hike is substantial, it is able to increase revenue despite the widespread cigarette smuggling. Tobacco taxation policy in Brazil should be more consistent with regard to the annual increase of the specific tobacco excise rate by at least 20 percent to ensure tobacco affordability reduction. Ad valorem tax rates also should be increased or at least not decreased. Practices of tax evasion for all kinds of tobacco taxes should be investigated, and effective policies to prevent such practices should be developed and enforced. The apparent differences between the reported cigarette turnover and the taxable sales should be also investigated as it is also a way of tax evasion. Tobacco use surveillance and monitoring should be further developed in Brazil, including regular surveys with a collection of comprehensive information on tobacco products consumed. Brazil authorities already implemented some effective policies to counteract tobacco smuggling. Such efforts should be strengthened in line with the provisions of the FCTC Protocol to Eliminate Illicit Trade in Tobacco Products, which is already ratified by the country.