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Typically the highest unemployment rates in these nations are in the most rural of areas, which are precisely the areas where tobacco tax-based dollars are most often investment.
The reliance on taxes from tobacco across the 24 nations profiled in Figure 2 also lead many of the tobacco farmers not just in these nations, but globally, to have a higher level of income stability per acre, and also generate higher income for small and medium farmers. These are critical aspects of the broader and longer-term economic strategies of third-world nations to ensure that their most transient and difficult-to-transfer workers stay in their field of experience, which is agriculture. By incenting agricultural expertise in tobacco farmers, there is also a pronounced focus on how to increase profits per acre, thereby giving farmers and their families a chance to better themselves and also receive better healthcare and education in the process. In addition to all these benefits, the role of tobacco taxes and the revenues that flow back to both the farmers at the beginning of the supply chain and also to the nations collecting the taxes themselves is the opportunity to stabilize and control the costs of production in all aspects of tobacco processing and packaging. Simply put, having a tax on tobacco that encourages its consumption makes the entire supply chain more efficient with economies of scale more evenly distributed throughout the entire supply chain as well.
The Tobacco Demand Chain
The use of tobacco taxes within each nation also make the specific value chains, or the connection from supplier, through manufacturer, to buyer, more efficient, in turn creating more supply chain, logistics, manufacturing and service jobs. The streamlining of the tobacco value chain is also critical for greater volumes of tobacco to be available for sale in each nation, thereby increasing taxes and being able to invest in more improvements to hire more employees. With a streamlined value chain, nations will have the ability to not only hire more workers, but also provide a higher level of educational, healthcare and human services program as a result of the increased tax revenues as a result of the entire value chain being more efficient. Lastly, it has been shown in underdeveloped nations that the cultivation, harvesting and sale of tobacco correlate with Gross Domestic Product (GDP). This is especially true in the more agriculture economies that rely on agrarian-based industries for over 20% of their total revenues. All of these factors are driven by the need to produce greater volumes of tobacco to continually fuel greater tobacco tax revenues at the local, municipal, state or province and national level. With the exception being the development of alternative forms of tax including increasing sales or use taxes, value-based taxes or worse, abolishing tax exemptions on businesses, the steady growth of tobacco taxes globally is one of the brightest and highest growth revenue sources there are for literally dozens of the world's most in-need nations. Without tobacco and the taxes on it, many nations would be struggling to provide needed healthcare for their citizens.
The World Bank (2003)- the Economics of Tobacco Use & Tobacco Control in the Developing World. The World Bank. Brussels 3-4, February 2003
US Census Bureau (2007) - U.S. Census Bureau, Annual Survey of State and Local Government Finances (01-June-07); and State & Local Government Finance Data Query
State and Local Tobacco Tax Revenue, Selected Years 1977-2005 thousands of dollars)
Region and State 1977 1982 1987 1992 1997 2002 2004 2005 United States
District of Columbia
Far West 
1] Alaska and Hawaii are excluded from the Far West regional totals, but are included in the U.S. totals.
Suggested Citation: U.S. Census Bureau, Annual Survey of State and Local Government Finances (01-June-07); and State & Local Government Finance Data Query
System. http://www.taxpolicycenter.org/tpc/pages.cfm.The Urban Institute-Brookings Institution Tax Policy Center. Data from U.S. Census Bureau, Annual Survey of State and…[continue]
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