Peru participated actively in the process of developing and negotiating the WHO Framework Convention on Tobacco Control (FCTC), adopting it in 2003 and approving it in 2004. Since then, the country has undergone a number of tobacco-related tax changes in order to conform to the FCTC. During this continuous process of adapting to promote public health, Peru has made significant progress in terms of taxes on tobacco products.
The main objective of this research is to identify a tax strategy for reducing the high social and economic costs related to smoking in Peru, in keeping with the recommendations of the World Health Organization (WHO). The study used information on the amounts of tobacco consumed (apparent consumption) that are econometrically related to prices, the income of the population and a set of variables that help to capture the effect of non-taxpolicies (such as the implementation of the FCTC agreement). With this information, and taking account of the industry’s recent behaviour after the changes in taxes, tax policy scenarios were simulated that could help
progressively reach the level of tax burden required to achieve the WHO objectives.