The thesis focuses on tax policy in low- and middle-income countries by moving the metric from price to affordability (which considers price and income simultaneously). This is important since many low- and middle-income countries are growing rapidly and price increases may not be reducing consumption. First, methods for measuring the affordability of cigarettes are proposed. Secondly, trends in affordability over time and across countries are investigated. Results show that cigarettes have become less affordable in high-income countries and more affordable in low- and middle-income countries since 1990, and at a faster pace in recent years. Furthermore, where cigarettes have become less affordable price increases have been the catalytic factor, while in those countries where cigarettes have become more affordable growth in prices has not kept pace with growth in incomes. The concept of affordability is operationalised by proposing a tax policy rule that explicitly targets affordability using a case study on South Africa.