Tobacco’s billion-rupee paradox : is Mauritius earning from smoking or paying for it?

While successive national budgets consistently lean on cigarette excise duties to boost the treasury, a deeper look at the balance sheet reveals a troubling economic reality. Data shows that the escalating healthcare and productivity costs of tobacco now outpace the billions it generates for the State.

The 2026-27 Budget once again raised excise duties on cigarettes, extending a strategy that successive Mauritian governments have pursued for years: make smoking more expensive, discourage consumption and increase public revenue at the same time. But behind this familiar Budget measure lies a more uncomfortable question: how much does tobacco really contribute to Mauritius – and how much is the country paying for it in return?

For economist Bhavish Jugurnath, tobacco remains a significant source of income for the Mauritian State. Government revenues flow through several channels: excise duties, import taxes, VAT and licensing fees linked to the tobacco trade. According to the Global Tobacco Industry Interference Index 2025, tobacco taxes generated approximately Rs 5.7 billion in revenue in 2020. Over the years, tobacco taxes have regularly been increased in national budgets both to generate revenue for the State and to discourage consumption, reflecting a paradox that many governments around the world continue to face: relying on tobacco revenues while simultaneously trying to reduce smoking rates. As long as cigarettes continue to be sold, governments collect taxes. Yet if anti-smoking policies succeed, that source of revenue inevitably shrinks.

The dilemma becomes even more striking when the broader economic costs of tobacco are taken into account. Hospital admissions, cancer treatment, cardiovascular disease, respiratory illnesses, long-term medical care and losses in productivity all carry an economic cost that rarely appears in public finance figures. According to the same report, the overall economic burden of tobacco in Mauritius is estimated at Rs 6.27 billion annually – exceeding the revenue generated by tobacco taxation.

Suddenly, the balance sheet looks very different. Economist Bhavish Jugurnath notes that the supposed economic gain becomes highly questionable when these wider costs are considered. In other words, while cigarettes generate billions for the Treasury, smoking may ultimately cost Mauritius even more. This burden extends well beyond government accounts, as the healthcare system absorbs the cost of treating smoking-related illnesses. Simultaneously, families face heavy medical expenses, lost income, and caregiving responsibilities, while businesses lose productive years through illness, disability, and premature death. The consequences for the healthcare system, for families and for the national economy are considerable over the long term, accompanied by a heavy human toll of approximately 1,301 tobacco-linked deaths in Mauritius in 2025 alone.

Economists and public health experts largely agree on one point: raising prices remains one of the most effective ways to reduce smoking. Jugurnath says tax increases are particularly effective among young people, first-time smokers and lower-income groups, who tend to be more sensitive to price increases. Taxation remains one of the most effective tools to reduce tobacco use, yet it clearly has limits.

For heavily dependent smokers, higher prices do not necessarily translate into quitting. Instead, cigarettes may simply absorb a larger share of already constrained household budgets. This results in a difficult policy question regarding how far taxes can be increased before they become primarily punitive rather than preventative. This is why Jugurnath argues that taxation cannot carry the anti-smoking strategy on its own. Prevention campaigns, smoking cessation programmes, counselling services and greater support for smokers trying to quit remain essential if Mauritius hopes to further reduce tobacco consumption.

Illicit trade and the rise of vaping

Another challenge frequently raised by economists and public health specialists is the risk of illicit tobacco markets. As legal cigarettes become increasingly expensive, smuggled or untaxed products become more attractive to some consumers, a phenomenon already observed in numerous countries that have implemented aggressive tobacco taxation policies. For Mauritius, maintaining effective customs controls and strengthening enforcement against illicit trade may become increasingly important if cigarette prices continue to rise. Jugurnath believes anti-smoking policies must be accompanied by stronger action against illegal tobacco trafficking to prevent tax increases from simply shifting consumers toward the black market.

Furthermore, even as traditional cigarettes remain dominant, the nicotine market itself is evolving. Electronic cigarettes and alternative nicotine products have gained popularity in many countries and are increasingly attracting younger consumers. From an economic perspective, this shift could gradually reduce revenues generated by conventional cigarettes while creating new markets around vaping products. From a public health perspective, however, the risks may simply be changing form, and Jugurnath warns that the increase in vaping among young people could create a new generation dependent on nicotine. For policymakers, the challenge may no longer be limited to reducing cigarette consumption but to preventing nicotine addiction more broadly.

Mauritius has long been considered one of Africa’s leaders in tobacco control. The country was among the first in the world to ratify the World Health Organization Framework Convention on Tobacco Control in 2004 and introduced graphic health warnings on cigarette packets in 2008. Over the years, authorities have implemented a series of increasingly restrictive measures, including bans on tobacco advertising, smoke-free public spaces and repeated increases in cigarette taxation. According to the Global Tobacco Industry Interference Index 2025, Mauritius ranks 15th among 100 countries assessed for efforts to limit tobacco industry interference in public policy.

Yet despite these advances, the latest figures reveal a more complicated reality. The Health Statistics Report 2024 indicates that more than 1.13 billion cigarettes were imported into Mauritius in 2024, compared with approximately 1.06 billion in 2023. This increase suggests that consumption remains substantial despite years of tax increases and anti-smoking campaigns. Meanwhile, smoking prevalence among adults aged over 15 was estimated at 13% in 2023. More worrying still is the situation among younger Mauritians, where available data shows that 18% of young people aged between 13 and 15 were smokers in 2017.

For health authorities, this raises an uncomfortable possibility: while one generation of smokers may be declining, another could already be emerging. For Jugurnath, these figures reinforce the need for Mauritius to continue strengthening its anti-tobacco policies, even if this eventually means accepting lower fiscal revenues from the sector. He insists that public health must remain the priority, arguing that the costs associated with chronic diseases, premature deaths, and productivity losses represent a far heavier burden for the country than the revenues generated by tobacco taxation. The challenge facing Mauritius is therefore becoming increasingly clear. The question is no longer whether tobacco generates revenue for the State, but whether Mauritius can continue to afford the bill that comes with it.