Enhancing Public Health and Fiscal Stability in North Macedonia through Tobacco Taxation (Evidence-Based Modeling, 2025–2030)

This Policy Brief was written by Analytica in North Macedonia. The policy brief simulates the effect of raising cigarette taxes annually from 2025 to 2030 on tax revenue collection and public health outcomes. Specifically, the researchers consider the impact of an annual 6% tax increase based on the current excise calendar, as well as larger 12% annual increase. The researchers consider these tax changes in the context of real wage growth and inflation in the country, which translates to an average purchasing power growth of 11% to 13% annually. The findings show that both scenarios raise additional tax revenue, although these gains are larger under the 12% tax increase scenario, between 8.68% and 8.89%, compared to around 6%, annually. The alternate, 12% tax increase scenario would also positively impact public health, reducing consumption from 180.6 million packs in 2025 to 163.8 million by 2030 and reducing smoking prevalence from 48.4% to 46.7%. As a result, the simulation finds that premature smoking-related deaths would decline annually with 1,361 deaths averted in 2026 and around 1,500 in 2030. Youth would also benefit from this larger tax increase, with a decreased youth smoking prevalence that would result in 576 to 624 lives saved each year. The policy brief concludes with recommendations for policy makers to implement larger, sustained tax increases that outpace income growth and inflation to reduce consumption and raise tax revenue.