Introduction
In Part I, we established that Zambia’s 2025 health tax reforms on tobacco, alcohol, and sugar-sweetened beverages (SSBs) are evidence-based interventions capable of generating up to ZMK3.2 billion annually while reducing non-communicable diseases (NCDs). However, good policy on paper does not automatically translate into good outcomes on the ground. Part II addresses the three critical pillars for success: closing enforcement loopholes through digital tax stamps, strategically earmarking revenues to build political sustainability, and supporting tobacco farmers to transition to viable alternatives.

Closing the Leakage: Digital Tax Stamps and the Enforcement Gap
Zambia is currently collecting only an estimated ZMK1.5 billion of a potential ZMK3.2 billion from health taxes. The K1.7 billion gap has two components: reduced effective rates and, critically, collection efficiency stuck at roughly 50%. The single most effective tool to close this gap is a modern, ISO-compliant digital tax stamp system. Kenya’s experience is instructive. Following the rollout of its digital tax stamp system in 2013, legitimate cigarette and cigar sales rose by 76% , and tobacco excise revenue grew by 13% even as smoking prevalence declined. The gain came from formalising the illicit market, not from increased consumption. Tanzania similarly saw excise revenue rise 34% after introducing electronic tax stamps.

However, Tanzania’s ongoing struggles offer a warning: digital stamps alone are insufficient if the underlying tax structure is flawed. Tanzania’s three-tier cigarette excise, which favours domestic tobacco, has left its tax share stuck at 43% (compared to WHO’s 75% benchmark), and smoking prevalence has not fallen. For Zambia, the message is clear: pair the forthcoming digital stamp procurement with a single, uniform specific excise rate on all cigarettes and an equivalent tax on loose-leaf tobacco (which constitutes an estimated 40% of smoked tobacco and is currently largely untaxed, sold to children in markets).

Earmarking: Building Political Sustainability
Should health tax revenues be dedicated to health spending? The evidence offers qualified support. At least 80 countries earmark some revenue for health, and 54 do so specifically for health taxes. The Philippines’ Sin Tax Law earmarked 85% of incremental revenues for universal health coverage, tripling health resources and enrolling over 15 million previously uninsured families. Thailand’s 2% surcharge on tobacco and alcohol funds the ThaiHealth foundation, which has helped reduce smoking prevalence from 22.5% to 18.2%.

Conversely, Ghana’s experience shows the risk: the National Health Insurance Levy (2.5% on VAT) saw Treasury reduce complementary allocations, and a 2017 cap law limited access until civil society advocacy secured its uncapping in 2025. South Africa, the region’s largest health-tax collector, does not earmark at all.

The best path for Zambia is likely a soft earmark: explicit dedication of incremental health-tax revenue to named health programmes (e.g., essential medicines, NCD prevention, clean water in schools) through the annual budget process, preserving parliamentary appropriation authority while building public and political support.

The Farmer Transition: Moving Beyond Tobacco
Industry claims that tobacco taxes will devastate smallholder farmers invert the truth. Research found that most Zambian smallholder tobacco farmers operate at a net loss after accounting for unpaid family labour, with roughly three-quarters locked into debt cycles with leaf-buying companies. The current system, not the tax, is already failing them.

Article 17 of the WHO Framework Convention on Tobacco Control explicitly mandates support for economically sustainable alternative livelihoods. Zambia should use a portion of new health tax revenues to fund crop substitution programmes (legumes, horticulture, cotton), agricultural subsidies, and market access mechanisms. This transforms a dependency narrative into a diversification opportunity.

Conclusion
Zambia’s health tax reforms are morally sound and fiscally necessary. But their success depends on enforcement (digital stamps, uniform rates), smart revenue use (soft earmarking), and genuine farmer support (diversification programmes). The tobacco and alcohol industries will continue to lobby against these measures. Parliament’s role is to ensure that policy decisions reflect Zambian interests not corporate profits. The prize is a healthier, more prosperous, and fiscally resilient nation.

About the Author
Robert Mwale serves as Lead Public Finance Researcher at the Centre for Trade Policy and Development (CTPD). He also serves as Coordinator for the Zambia Civil Society Organization Debt Alliance (CSO DA) and the Zambia Tax Platform (ZTP). He holds a bachelor’s degree in economics from the University of Zambia (UNZA), A Master of Science in economics from the Copperbelt University and Master of Science in Financial Services from ZCAS University. He also has qualifications and competency in Investment Advisor and Stockbrokers Course.