An empirical analysis of the effect of tobacco taxation on economic growth in 38 African countries

Abstract

Globally, tobacco use claims millions of lives every year. This has necessitated policy responses including tax measures aimed at reducing the consumption of tobacco. Nonetheless, opponents of tobacco taxation posit that, it may hurt economic growth. This study, therefore, examines the effect of tobacco taxation on economic growth in 38 African countries from 2008 to 2018. The system generalised method of moments (GMM) regression is used as the estimation technique. The findings show that, tobacco taxation enhances economic growth both in the short- and long-run periods, especially, through its effect on population health. Thus, African governments should be confident when increasing tobacco tax because, it has an added advantage of propelling economic growth.