A meeting supported by the Vienna Institute for International Economic Studies and the World Bank in Vienna, Austria in June 2024 served as an opportunity to share the success of recent tobacco excise tax reforms in North Macedonia, while convening senior officials from EU candidate countries. Officials exchanged on taxation and health policy, customs and tax administration and learned from each others experiences in the region. The meeting also included key researchers from the Western Balkans, European Commission, WHO, Johns Hopkins University Bloomberg School of Public Health.
The tobacco tax reform in North Macedonia is the result of a multi-year collaboration with government. In 2022, the World Bank developed a short assessment of health taxes in North Macedonia as an input to a Public Finance Review. Dissemination to the Ministry of Finance resulted in further collaboration on a comprehensive assessment of health taxes that informed a framework for policy reforms focused on EU accession. The support included technical assistance, analytics and modelling of policy reforms. Using these resources, the team supported a series of in person and virtual workshops with government around the details of the reforms.
In June 2023, the team then submitted a comprehensive report to government, as well as a tobacco and alcohol tax reform simulation model that has been used for trainings and as a modality to help guide future reforms. In October 2023, tobacco reforms were enacted, which included an annual increase of the specific tax by MKD 2.3 per cigarette starting from January 1 2024- January 1 2030.
A dissemination workshop occurred in November 2023 in order to promote these recent reforms and to foster neighboring countries’ collaboration and address key challenges and opportunities in the field of health taxes. The conference was attended by colleagues from the Ministry of Finance and Customs Administration, the European Commission, World Bank, International Monetary Fund, World Health Organization, and United Nations Development Program, as well as representatives of academia, civil society, and the business community.
North Macedonia continues on its tobacco reform pathway, with the price of cigarettes increasing by an additional 10MKD as of October 17 2024, a change directly resulting from last years adjustments to the Excise Tax Law. The government expects an income of 13 million euros per year in the budget, while cigarette prices are projected to continue to rise every year due to regular tax changes. The smoking prevalence among adults is expected to decline from over 48 percent by 1 pp during the transition saving thousands of premature deaths.
The recent tobacco tax reforms are an important milestone in North Macedonia’s pathway to joining the European Union, and to inform future engagement between North Macedonia and the Bank. They will ensure North Macedonia’s compliance with the European Union’s alcohol and tobacco tax directives by 2030. This achievement would not have been possible without the technical assistance and support of the World Bank.