scholarly journals Questioning the regressivity of tobacco taxes: a distributional accounting impact model of increased tobacco taxation

2020 ◽  
pp. tobaccocontrol-2019-055315 ◽  
Author(s):  
Stéphane Verguet ◽  
Patrick K A Kearns ◽  
Vaughan W Rees
Keyword(s):  
Low Income ◽  
Cost Effective ◽  
Income Group ◽  
Cigarette Consumption ◽  
Tax Burden ◽  
Income Share ◽  
Tobacco Taxes ◽  
Tobacco Tax ◽  
Definition Of ◽  
Tobacco Taxation

BackgroundTobacco taxes, as with other ‘sin taxes’, are generally regarded as a highly cost-effective mechanism to reduce consumption but are often considered by policymakers to be regressive, undermining efforts to fully implement them at levels recommended by the WHO due to concerns of fairness. We aim to demonstrate whether there are circumstances in which the impacts of additional tobacco taxes are not regressive, using a standard income-share accounting definition of tax burden.Methods and findingsWe apply mathematical modelling and explore the hypothetical distributions in the net change in tobacco taxes and cigarette expenditures by income group, following an increase in tobacco taxation. The hypothetical distribution per income group of additional taxes and cigarette expenditures borne by individuals following tobacco tax hikes was calculated with respect to a selection of parameters including: the change in the retail price of cigarettes, the price elasticity of demand for tobacco, smoking prevalence, cigarette consumption and individual income. We determine the range of hypothetical parameter values for which increased tobacco taxation should not be considered to penalise the poorest income groups when examining marginal cigarette consumption expenditures and using an accounting definition of tax burden.ConclusionsOur findings question the doctrine that tobacco taxes are uniformly regressive from a standard income-share accounting view and point to the importance of the specific features of tax policy to shape a progressive approach to tobacco taxation: tobacco tax increases are less likely to be regressive when accompanied by a broad framework of demand-side measures that enhance the capacity of low-income smokers to quit tobacco use.

scholarly journals Price, Income, and Affordability as the Determinants of Tobacco Consumption: A Practitioner’s Guide to Tobacco Taxation

2020 ◽  
Author(s):  
Nigar Nargis ◽  
Michal Stoklosa ◽  
Ce Shang ◽  
Jeffrey Drope
Keyword(s):  
Price Elasticity ◽  
Tobacco Consumption ◽  
High Income ◽  
Cigarette Consumption ◽  
Tobacco Products ◽  
Middle Income ◽  
Middle Income Countries ◽  
Price Increases ◽  
Tobacco Tax ◽  
Tobacco Taxation

Abstract Introduction Tobacco product prices and consumers’ income are the two major economic determinants of tobacco demand. The affordability of tobacco products is dependent on the price of tobacco products relative to consumer income. Increase in tobacco tax is expected to lead to higher price, lower affordability, and reduced consumption. Price elasticity and affordability elasticity are used in analyzing the effect of tobacco tax increases on tobacco consumption and public health. The availability of both parameters raises the question of which one to apply in policy discussions. Aims and Methods Using global data on cigarette consumption, price, income, and tobacco control measures for 169 countries over 2007–2016, this study estimated the price elasticity and affordability elasticity of cigarette consumption by country income classification using country-specific fixed effects model for panel data. Results The estimates show that the restriction of equal strength of the effects of price and income changes on tobacco consumption maintained in affordability elasticity estimation is valid for low- and middle-income countries, while it is rejected for high-income countries. Conclusions Affordability elasticity may prove to be a useful parameter to explain and predict the sensitivity of consumers to tobacco tax and price policy changes under conditions of robust economic growth, which are more likely to be observed in countries with initial low- or middle-income setting. It can provide a reasonable benchmark for tobacco tax and price increase necessary to effectively reduce affordability and consumption of tobacco, which can form a basis for building systematic tax and price increases into the tobacco tax policy mechanism. Implications Price elasticity measures the sensitivity of consumers to changes in real prices, holding real income constant. Affordability elasticity measures the sensitivity of consumers to price changes adjusted for inflation and income changes. Existing scientific literature on tobacco demand abounds in both price and affordability elasticity estimates, without providing a clear explanation of the theoretical and policy implications of using one parameter over the other. By estimating and comparing price and affordability elasticities for high-income and low-and-middle-income countries separately, this article offers a guide to the practitioners in tobacco taxation for evaluating the effectiveness of tax-induced price increases on tobacco consumption.

Impact of three annual tobacco tax rises on tobacco sales in remote Australian Aboriginal community stores

2020 ◽  
pp. tobaccocontrol-2020-055865
Author(s):  
David P Thomas ◽  
Emma McMahon ◽  
Zhiqiang Wang ◽  
Michelle M Scollo ◽  
Sarah J Durkin
Keyword(s):  
Interrupted Time Series ◽  
Tobacco Consumption ◽  
Interrupted Time Series Analysis ◽  
Aboriginal Communities ◽  
Tobacco Taxes ◽  
Tobacco Sales ◽  
Tobacco Tax ◽  
Australian Aboriginal Community ◽  
Tobacco Taxation ◽  
First Time

BackgroundThere is strong evidence from many settings that tobacco tax rises which increase prices reduce tobacco consumption, but only limited evidence from Indigenous settings.MethodsWe analysed 3 years (2016–2018) of weekly sales data from 32 stores in remote Aboriginal communities. We used interrupted time series analysis to estimate the immediate impact of the price rice following annual 12.5% tobacco tax rises on sales on (A) stick equivalents of tobacco and (B) fruit and vegetables (kg) per $A1000 of grocery sales, and on the trend in sales between price rises.ResultsWe detected 5.8% and 8.2% immediate declines in tobacco sales following the price rises associated with annual 12.5% tax rises in 2016 and 2018, and a non-significant decline (1.6%) following the 2017 tax rise. Decreased sales were mainly driven by declines in mainstream and premium factory-made cigarettes. Fruit and vegetable sales did not change at the time of tobacco price rises.ConclusionFor the first time, we demonstrated evidence of price-sensitivity and the immediate impact of price rises from tobacco tax rises on tobacco sales in remote Aboriginal communities. We acknowledge that Australia already has very high tobacco taxation and prices, but recommend further increases to the taxation of roll-your-own (RYO) tobacco to prevent smokers and industry using cheaper RYO cigarettes to undermine this impact of high tobacco taxes and prices.

Prefab Materials for Self Build Housing System in Malaysia

2015 ◽  
Vol 747 ◽  
pp. 250-253
Author(s):  
Wan Srihani Wan Mohamed ◽  
Yahaya Ahmad ◽  
Nik Fazlysham Nik Mat ◽  
Aznida Azlan
Keyword(s):  
Low Income ◽  
Low Cost ◽  
Cost Effective ◽  
Income Group ◽  
Housing System ◽  
Housing Provision ◽  
Skill Levels ◽  
Self Help ◽  
House Construction ◽  
Low Cost Housing

Prefabricated system has been used extensively in many developed and developing countries to provide low cost housing. There are many case studies that took the advantage of prefabricated system as part of self help approach in house construction. Prefabricated system in self help housing proved to be cost effective, provide employment opportunities, utilise low skill levels and maximise local natural resources. Malaysia is also promoting prefabricated system to be used in low cost housing provision. There are obstacles to implement such technology into the conventional construction industry. This paper investigates the possibility of adapting local resources, such as timber, into prefabricated components as a mean to promote not only modular coordination concept but also promote self build approach in the community at a lower skill labour. It is not an immediate solution to housing issues yet it provides alternatives to house the low income group and contribute to increase the supply of housing.

scholarly journals Inequality-Reducing Effects of Tobacco Tax Increase: Accounting for Behavioral Response of Low-, Middle-, and High-Income Households in Serbia

2021 ◽  
Vol 18 (18) ◽  
pp. 9494
Author(s):  
Marko Vladisavljević ◽  
Jovan Zubović ◽  
Mihajlo Đukić ◽  
Olivera Jovanović
Keyword(s):  
Low Income ◽  
Behavioral Response ◽  
Tobacco Consumption ◽  
High Income ◽  
Tax Burden ◽  
Household Expenditures ◽  
Income Groups ◽  
Tobacco Tax ◽  
Positive Effect ◽  
Low Income Households

While previous research has indicated that increasing tobacco excises is a crucial instrument for lowering tobacco demand, this policy has been criticized for its alleged regressive impact on the poor. However, this critique does not take into account the behavioral response, i.e., decrease in consumption that occurs after excises and prices increase. In this paper, we examine the effect of cigarettes’ price increase on tobacco consumption, household expenditures, and tax burdens in three income groups and provide empirical arguments on the regressivity/progressivity effects of tobacco tax increase. Estimated elasticities indicate that all groups decrease their cigarettes demand with increasing prices, with demand decrease stronger for low- than for middle- and high-income households. Results further suggest that increasing tobacco excises (1) decreases tobacco expenditure of low-income households, which increases their productive consumption, such as on food, clothes, etc., and (2) redistributes the tobacco tax burden from low- to high-income households. Therefore, excise increase policies do not have an adverse effect on the position of the low-income households; on the contrary, they lower their cigarettes expenditure and their tax burden, while lower cigarettes consumption has an additional, positive effect on their health, which attenuates future inequalities.

scholarly journals Differential price responses for tobacco consumption: implications for tax incidence

2022 ◽  
pp. tobaccocontrol-2021-056846
Author(s):  
Guillermo Cruces ◽  
Guillermo Falcone ◽  
Jorge Puig
Keyword(s):  
Income Distribution ◽  
Age Groups ◽  
Cost Effective ◽  
Tobacco Consumption ◽  
Price Elasticities ◽  
Tobacco Taxes ◽  
Household Expenditure Survey ◽  
Tobacco Tax ◽  
Effective Policy ◽  
Demand Price Elasticity

Increasing tobacco taxes is considered the most effective an cost-effective policy to reduce tobacco consumption. However, a common objection to tobacco taxes is that they tend to rely disproportionately on the poorest individuals since less affluent smokers incur proportionately greater expenditures on cigarettes compared with more affluent smokers. Such objections usually assume that all smokers throughout the income distribution react similarly to an increase in tobacco prices. But, if less affluent smokers are more sensitive to price changes (ie, they have a higher demand price elasticity), reductions in tobacco consumption should be higher at the bottom of the income distribution. This paper uses data from Argentina’s Household Expenditure Survey to estimate demand price elasticities for tobacco by income and age groups. Results indicate that less affluent smokers present higher demand price elasticities for cigarettes than more affluent ones. A 10% increase in cigarette prices would decrease consumption by 8.5% (4.4%) for the poorest (richest) smokers. In addition, young people are the most elastic group. These differential elasticities have relevant implications in terms of the distributional incidence of increasing tobacco taxes. As less well-off individuals reduce consumption relatively more, they bear a relatively lower tax burden. Thus, tobacco tax increases may not be regressive as is often believed. As a whole, this paper provides policymakers with relevant arguments for policy discussion and the public debate on common objections to increasing tobacco taxes.

Extended cost–benefit analysis of tobacco taxation in Brazil

2021 ◽  
pp. tobaccocontrol-2021-056806
Author(s):  
Jose Angelo Divino ◽  
Philipp Ehrl ◽  
Osvaldo Candido ◽  
Marcos Aurelio Pereira Valadao
Keyword(s):  
Cost Benefit Analysis ◽  
Substantial Reduction ◽  
Cost Benefit ◽  
Cigarette Consumption ◽  
Sample Survey ◽  
Net Income ◽  
Benefit Analysis ◽  
Medical Expenses ◽  
Tobacco Taxes ◽  
Tobacco Taxation

BackgroundBrazil has experienced a persistent and substantial reduction in the prevalence of smoking in the population since 2006 due to increased taxes on tobacco and other tobacco control policies. Despite the effectiveness of these measures, however, the socioeconomic costs of smoking are still very high. Tobacco taxation in Brazil plays an important role among the measures adopted to curb tobacco use.MethodsThe study combines data from the National Household Sample Survey of 2008 and the National Health Survey of 2013 and applies cross-section, pooled, and probit estimations, to estimate price elasticities of tobacco consumption by distinct population cohorts. The paper presents a comprehensive cost–benefit analysis resulting from a one-time tax increase on manufactured cigarettes using estimated conditional price elasticity of cigarette consumption and probability of smoking by income and age quartiles.FindingsEach 10% price increase (BRL 0.54), due to higher tobacco taxes, reduces cigarette consumption by about 5%, and for poor smokers, it would lead to net income gains by about BRL 39.00 per month (in 2019 values). The highest net income effects were observed for the younger, aged between 15 and 29 years, and for middle-aged individuals, between 40 and 59 years old. Higher tobacco taxes lead to lower medical expenses on tobacco-related diseases and a longer, healthier and more productive life. Most importantly, this policy is progressive, as its economic effects are stronger for the poorer than for the richer according to the income quartiles.ConclusionsA tax increase that rises cigarette prices generates significant social benefits by reducing tobacco spending and medical expenses on tobacco-related diseases and raising future years of life and net income. The total benefits for the individual and the society go way beyond the public finance improvement.

Taxing times? Smoker response to tax increases

2014 ◽  
Vol 7 (1) ◽  
pp. 36-48 ◽  
Author(s):  
Nathan Cowie ◽  
Marewa Glover ◽  
Dudley Gentles
Keyword(s):  
New Zealand ◽  
Low Income ◽  
Effective Means ◽  
Content Type ◽  
Deprived Neighbourhoods ◽  
Tobacco Taxes ◽  
Price Increases ◽  
Tobacco Tax ◽  
Adaptive Behaviours ◽  
The Impact

Purpose – Taxing tobacco is one of the most effective means to reduce smoking but concerns about the impact on poor smokers are a barrier. New Zealand resumed increasing tobacco taxes in April 2010. The paper hypothesised smokers would attempt to stop smoking and/or adapt, changing their smoking behaviours in response to price increases. The paper aims to discuss these issues. Design/methodology/approach – The authors conducted a door knock survey of smokers and recent ex-smokers who were home when visited. Participants (n=428) were from socioeconomically deprived neighbourhoods of Auckland with large proportions of Māori and Pacific Island people. Findings – Many smokers (66 per cent) attempted to quit an average of 3 times. More than 40 per cent stopped for at least 24 hours without intending to quit altogether, monthly or more. Consumption reduced among 40 per cent of participants, by an average 7.1 cigarettes daily. More than a fifth of participants switched to cheaper brands. Switching from factory made cigarettes to roll your own tobacco (6 per cent) or vice versa (5 per cent) was uncommon. Research limitations/implications – The method resulted in a low response rate. Tobacco tax is associated with reduced consumption and high levels of frequent quit attempts in socioeconomically deprived communities therefore our study supports tax increases as a means of reducing smoking. Originality/value – This is the first paper to investigate the effect of large recent New Zealand tobacco tax increases on low-income smokers’ adaptive behaviours.

scholarly journals Tobacco tax evasion in Western Balkan countries: tax evasion prevalence and evasion determinants

2022 ◽  
pp. tobaccocontrol-2021-056879
Author(s):  
Marko Vladisavljevic ◽  
Jovan Zubović ◽  
Olivera Jovanovic ◽  
Mihajlo Djukic ◽  
Natasa Trajkova Najdovska ◽  
...  
Keyword(s):  
Tobacco Control ◽  
Bosnia And Herzegovina ◽  
Low Income ◽  
Tax Evasion ◽  
Choice Model ◽  
Control Measure ◽  
Tobacco Products ◽  
Tobacco Taxes ◽  
Illicit Market ◽  
Tobacco Tax

Background and objectiveTobacco tax evasion undermines the goal of tobacco taxes as a tobacco control measure to make tobacco products less affordable, increases the health risks for those who smoke and decreases the government revenue. This paper analyses the tobacco tax evasion in six Western Balkan (WB) countries: Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Serbia. The aim of this research is to estimate the size of the illicit market and identify the main determinants of tax evasion activities in the Southeastern European region.Data and methodsData from 2019 Survey on Tobacco Consumption in Southeastern Europe (STC-SEE) are used. STC-SEE provides uniquely comparable nationally representative data on smoking behaviour for adult (18–85 years old) population for each country. Tax evasion is defined on the basis of available information on tax stamps, health warnings, price and the place of purchase, in accordance with the previous research on tax evasion. In order to estimate the determinants of illicit purchases we use binary choice model of tax evasion.ResultsThe study finds that 20.4% of all current smokers in WB countries evade taxes on tobacco products, with evasion being much more frequent for hand-rolled (HR) tobacco (86.7%) than for the manufactured cigarettes (MC) (8.6%). While HR is predominantly illicit in all six countries, MC evasion varies significantly, with evasion being significantly higher in Montenegro and Bosnia and Herzegovina. Results further suggest that tax evasion is higher in the statistical regions where institutional capacities to tackle illicit trade are lower, in municipalities bordering countries with high MC evasion, as well as among smokers with low income, women and elderly. We also provide evidence that higher tobacco taxes and prices do not increase illicit consumption.ConclusionThe findings from the research suggest that in order to decrease tax evasion, governments should put additional effort to strengthen institutional capacities to tackle illicit tobacco markets. Furthermore, improving regional coordination in development and implementation of tobacco control policies, including the prevention of illicit market, is essential in lowering evasion in all WB countries. Finally, WB countries should regulate and enforce excise tax stamp requirements on the HR tobacco market to a much higher degree.

scholarly journals Tobacco price elasticity in Serbia: evidence from a middle-income country with high prevalence and low tobacco prices

2020 ◽  
Vol 29 (Suppl 5) ◽  
pp. s331-s336 ◽  
Author(s):  
Marko Vladisavljevic ◽  
Jovan Zubović ◽  
Mihajlo Đukić ◽  
Olivera Jovanović
Keyword(s):  
Price Elasticity ◽  
Low Income ◽  
Tobacco Consumption ◽  
Reliable Estimate ◽  
Demand Model ◽  
Middle Income ◽  
Middle Income Countries ◽  
Tobacco Taxes ◽  
Tobacco Tax ◽  
High Prevalence

In this paper, we use Deaton’s demand model and Household Budget Survey data from 2006 to 2017 to provide a first robust and reliable estimate of cigarettes price elasticity for Serbia. The case of Serbia is particularly interesting and important as it provides evidence for a country in which tobacco market is characterised by the high tobacco consumption, low prices and large perceived impact of multinational tobacco companies on public revenues, export and employment, given their considerable cigarette production in Serbia. The price elasticity of cigarettes is estimated at −0.639, in line with the previous estimates for the low-income and middle-income countries. Estimated negative cigarettes price elasticity for Serbia suggests that tobacco tax policy could be used effectively to reduce cigarette consumption in Serbia, which could lower the harmful health effects of cigarettes. Furthermore, a calculation based on the estimated elasticity suggests that increasing tobacco taxes could also have positive fiscal effects, as the expected revenue from the taxes would increase.

scholarly journals Smoking Behavior in Low- and High-Income Adults Immediately Following California Proposition 56 Tobacco Tax Increase

2020 ◽  
Vol 110 (6) ◽  
pp. 868-870
Author(s):  
Courtney Keeler ◽  
Wendy Max ◽  
Tingting Yao ◽  
Yingning Wang ◽  
Xueying Zhang ◽  
...  
Keyword(s):  
Low Income ◽  
Smoking Prevalence ◽  
Smoking Behavior ◽  
Income Group ◽  
High Income ◽  
Behavioral Risk ◽  
High Income Group ◽  
Smoking Intensity ◽  
Tobacco Tax ◽  
System Data

Objectives. To compare the association of California Proposition 56 (Prop 56), which increased the cigarette tax by $2 per pack beginning on April 1, 2017, with smoking behavior among low- and high-income adults. Methods. Drawing on a sample of 17 206 low-income and 21 324 high-income adults aged 21 years or older from the 2012 to 2018 California Behavioral Risk Factor Surveillance System data, we explored 2 outcomes: current smoking prevalence and smoking intensity (average number of cigarettes per day among current smokers). For each income group, we estimated a multivariable logistic regression to analyze the association of Prop 56 with smoking prevalence and a multivariable linear regression to analyze the association of Prop 56 with smoking intensity. Results. Although we observed no association between smoking intensity and Prop 56, we found a statistically significant decline in smoking prevalence among low-income adults following Prop 56. No such association was found among the high-income group. Conclusions. Given that low-income Californians smoke cigarettes at greater rates than those with higher incomes, our results provide evidence that Prop 56 is likely to reduce income disparities in cigarette smoking in California.

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