Higher Excise Taxes Can Support Health and Development
Armenia has approved legislation to raise excise taxes on alcohol, tobacco products, gasoline and diesel fuel. The measure also introduces annual indexation of excise taxes on alcohol and is intended to lower alcohol affordability. For alcohol and tobacco, the policy is designed support healthier communities by making harmful products less affordable while generating additional public revenue.
The Armenian parliament passed the bill at its second reading with support from lawmakers in the governing Civil Contract party. The legislation sets different increases for different tobacco and nicotine products.
Tobacco Taxes Will Rise Every Year
Under the new framework:
- Excise taxes on tobacco products will increase by 7% each year.
- Heated tobacco products will face a substantially larger increase of 30% annually.
- For electronic cigarettes, the excise tax will double in the first year of the new system.
These measures create a predictable schedule for increasing tobacco and nicotine taxes. Higher prices help reduce consumption of tobacco and nicotine products and thus reduce and prevent harm. In this way they support public health objectives.
Armenia has previous experience with raising tobacco and alcohol taxes. In 2015, Armenia’s government proposed a 10% increase in excise taxes on cigarettes and alcohol. The measure was expected to generate an additional US$19 million for the government’s 2016 budget.
Alcohol Taxation Can Generate A Quadruple Win
The new alcohol excise tax increase also fits into a broader evidence base on pro-health taxation. Research on alcohol taxation describes higher alcohol taxes as a measure that can deliver quadruple benefits for people, population health, government revenue and sustainable development.
The full potential of raising alcohol excise taxation is best captured in its quadruple win:
- Prevent and reduce harm: Raising alcohol taxes is the single most cost-effective alcohol policy solution to directly lower population-level alcohol consumption and the wide range of harms and costs it causes – violence, injuries, cancer, liver and heart disease, mental ill-health, and premature deaths. It prevents suffering, saves lives, and protects families and communities.
- Generate revenue: Alcohol taxation is a cost-effective measure for governments to increase domestic revenues. The potential of alcohol taxation to bring in reliable and substantial funds often exceeds those from tobacco or sugar-sweetened beverage taxes.
- Finance health and development priorities: The revenues raised can be (soft) earmarked or strategically allocated to finance health systems, prevention and health promotion programs, education, or other vital public services, such as better enforcement and scientific evaluation of alcohol policies. This way alcohol taxation helps fund public goods and human development.
- Advance health equity and social justice: Alcohol harm disproportionately affects people in vulnerable and marginalised communities with low socio-economic status. Preventing and reducing alcohol harm benefits them the most and redirecting revenues toward public goods contributes to reducing health inequalities. Alcohol taxation is a rights-based, pro-equity policy that promotes social justice and strengthens the social contract by prioritizing people’s welfare over alcohol industry profit interests.
The potential of alcohol taxation to do good is substantial. In 2026, WHO released a landmark report on alcohol taxation that found: alcohol taxation is one of the strongest tools governments have to promote people’s health and sustainable development.
For instance, a global study estimated that increasing alcohol taxes globally by just 20% could generate additional revenue over US$ 9.4 trillion over 50 years – resources that could be used to fund healthcare, education, and social protection.
In 2024, the Task Force on Fiscal Policy for Health released a landmark report, “Health Taxes: A Compelling Policy for the Crises of Today.” It illustrates the significant potential of raising pro-health taxes for saving lives and it shows that raising alcohol taxes has the biggest potential for revenue generation. to invest in programs and services for people.
The Copenhagen Consensus Center released a landmark study in 2023. It identified 30 cost-effective interventions to achieve the SDGs in the fastest way possible. Analysis showed that the alcohol policy best buys in general and alcohol taxation on its own ranked second and third most effective out of all 30 interventions.
Implementing the alcohol policy best buys could prevent 150,000 deaths caused by alcohol in the next ten years. For every dollar spent on alcohol taxation alone, a country could generate social benefits worth $53.
A unique Movendi International analysis also shows the concrete potential of alcohol taxation for specific SDGs. Alcohol taxation helps achieve SDGs 1 (poverty eradication), 3 (health for all), 4 (quality education), 5 (gender equality), 8 (economic growth and productivity), 10 (equity), 11 (safe cities), 16 (freedom from violence), and 17 (partnership).
Making Alcohol Less Affordable Supports Health
Price matters because affordability influences alcohol use. When governments raise excise taxes and prices increase, alcohol becomes less affordable. This helps reduce population-level alcohol use and the health, social and economic harms linked to it.
Armenia’s Tax Policy Supports Long-Term Health Gains
Armenia’s new legislation goes beyond a one-time tax increase. Annual indexation establishes a continuing approach to excise taxation.
For alcohol, the key public health opportunity lies in maintaining affordability-reducing taxation over time.
Armenia’s latest policy therefore demonstrates how alcohol and tobacco excise taxation can serve wider health and development goals. By making harmful products less affordable and generating public revenue, effective taxation can help governments invest in a healthier future for all.