Introduction: Tobacco Use and Its Public Health Burden
Tobacco use remains a major public health challenge in Zambia. It is a leading risk factor for cardiovascular diseases, lung and other cancers, and chronic respiratory illnesses. Available evidence estimates that tobacco-related diseases contribute to approximately 7,000 deaths annually, while the economic cost of tobacco use amounts to about K2.8 billion each year—equivalent to roughly 1.2 percent of Zambia’s Gross Domestic Product (GDP).
Tobacco consumption cuts across all segments of society. While prevalence rates differ by age, gender, income level, and location, no population group is entirely unaffected. This widespread use underscores the need for effective tobacco control measures, including a robust excise tax policy that both discourages consumption and supports domestic resource mobilization.
Zambia’s Current Tobacco Excise Tax Structure
Despite the significant health and economic burden associated with tobacco use, Zambia’s current excise tax structure contains features that undermine both public health and fiscal objectives. The country operates a differentiated tax system for cigarettes, under which locally manufactured products receive a 75 percent excise tax exemption as an investment incentive aimed at promoting domestic production. Consequently, locally produced cigarettes face a substantially lower tax burden than imported products.
While intended to stimulate manufacturing, this preferential treatment creates several concerns: It reduces the effectiveness of tobacco taxation as a public health tool. It makes cigarettes more affordable than they otherwise would be, encouraging continued consumption. It limits the government’s ability to maximize tobacco tax revenues. It raises concerns regarding compliance with Article 5.3 of the WHO Framework Convention on Tobacco Control (WHO FCTC), which calls on governments to protect public health policies from the commercial and vested interests of the tobacco industry.
Consumption Trends and Revenue Mobilization Potential
The fiscal consequences of maintaining the current tax structure are significant. By lowering the effective tax burden on locally manufactured cigarettes, Zambia not only weakens efforts to reduce tobacco consumption but also forgoes substantial revenue that could support health and development priorities.
Evidence from the Tobacco Excise Tax Simulation Model (TETSiM)—developed by the University of Cape Town and launched in Zambia in 2025—demonstrates the magnitude of this opportunity. The model evaluates alternative cigarette tax scenarios through 2030 and estimates their impact on both consumption and government revenue.
Scenario 1: Maintaining the Current Structure
Under this scenario, Zambia largely retains its existing cigarette tax structure, with the specific excise tax adjusted only for inflation. The model projects that cigarette consumption would increase from approximately 82 million packs to 92 million packs. Real excise revenue would rise modestly to around ZMW300 million. While revenue increases slightly, tobacco consumption also rises, indicating limited public health gains.
Scenario 2: A Uniform Tax Structure
This scenario eliminates the tiered system and adjusts excise taxes in line with both inflation and income growth. The model projects that cigarette consumption would decline to approximately 70 million packs. Real excise revenue would exceed ZMW800 million. These findings demonstrate that a simplified and uniform excise tax structure can simultaneously reduce tobacco use and generate substantially higher government revenue.
Policy Implications
The evidence suggests that Zambia can achieve both health and fiscal objectives through tobacco tax reform. Specifically, the country should abolish the 75 percent excise tax exemption granted to locally manufactured cigarettes. Adopt a uniform specific excise tax that applies equally to all tobacco products, regardless of origin. Ensure that tobacco taxes regularly increase to keep pace with inflation and income growth. Strengthen tax administration and enforcement mechanisms to reduce opportunities for tax avoidance and evasion.
The Way Forward
The enactment of the Tobacco Control Bill represents an important milestone in Zambia’s tobacco control agenda. However, legislative reform must be complemented by a modern and effective tobacco tax policy. To fully realize the health and revenue potential of tobacco taxation, Zambia should prioritize the adoption of a uniform excise tax structure above industry interests.
Part II of this series will examine the structural reforms required to unlock the full benefits of tobacco taxation, including Scenario 3 of Cigarette Excise Tax Simulation, which adds an extra 15 percent annual increase on top of adjustments for inflation and income growth, the removal of harmful tax incentives, simplification of the tax system, stronger enforcement measures, and the institutionalization of a whole-of-government approach to tobacco control.
About the Author
Robinson Nakambo is the Lead Researcher for Public Finance Management at the Centre for Trade Policy and Development (CTPD). He holds a Bachelor of Economics (Honours) and a Master of Science in Economics from the University of Namibia (UNAM). While pursuing his Master’s programme, He participated in the African Economic Research Consortium (AERC) Joint Facility for Electives (JFE), a pan-African advanced graduate-level programme, specializing in Health Economics and Financial Economics.
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