scholarly journals Effects of the Brazilian tax reform plans on the tobacco market

2021 ◽  
pp. tobaccocontrol-2021-056822
Author(s):  
Jose Angelo Divino ◽  
Philipp Ehrl ◽  
Osvaldo Candido ◽  
Marcos Aurelio Pereira Valadao
Keyword(s):  
Tax Reform ◽  
Smoking Behaviour ◽  
National Health Survey ◽  
Cigarette Consumption ◽  
Sample Survey ◽  
Constitutional Amendment ◽  
Tax Collection ◽  
Goods And Services ◽  
Tobacco Tax ◽  
Cigarette Prices

BackgroundThere has been an intense debate in the Brazilian National Congress on how to reform the country’s tax system on consumption. This paper investigates the effects of the tax reform under the Constitutional Amendment Bill 45/2019 on cigarette prices, consumption and tax collection. The reform will introduce a new goods and services tax (GST) and tobacco excise tax (TET).MethodsThe micro data from the National Household Sample Survey (PNAD) of 2008 and the National Health Survey (PNS) of 2013 are inputs in the simulation in order to determine the smoking behaviour and consumer responses to price changes as accurately as possible across the different Brazilian states. We developed three scenarios for the tobacco tax reform and their effects on cigarette prices, smoking behaviour and tax collection. We also estimate the size of the illicit cigarette market by Brazilian state and simulate the impacts of a 10% reduction in its market share.FindingsOverall, we found that a GST of 27% and a TET of either 51%, 56% or specific 3.89 BRL per pack would lead to considerably higher cigarette prices, lower cigarette consumption and, above all, an increase of cigarette tax collection between 8% and 27% depending on the state. A discretionary 10% reduction in the illicit market would add about 8.5% of extra tax collection per year to the country.ConclusionsThe simulated scenarios demonstrated that, to keep the cigarette prices at least at the same level as those in the current tax scheme, TET should be no less than 77.85% of the retail price. This means that any politically feasible tax reform should result in higher cigarette prices and a reduction in cigarette consumption. Considering the nationwide effect, in all scenarios, the total increase in tobacco tax revenue is around 8.5% or 1.5 billion BRL per year. This extra revenue is highly desirable in an environment of chronic fiscal imbalance and the COVID-19 pandemic crisis.

scholarly journals Awareness and Understanding of GST among Indian Consumers: An Empirical Study

2018 ◽  
Vol 4 (02) ◽  
Author(s):  
Lovleen Gupta ◽  
Akash Agarwal
Keyword(s):  
Tax Reform ◽  
Research Work ◽  
Constitutional Amendment ◽  
Primary Data ◽  
Goods And Services ◽  
Indian Consumers ◽  
Incremental Growth ◽  
Level Of Understanding ◽  
Different Parts ◽  
Game Changer

The Goods and Services Tax (GST), India's biggest tax reform since Independence emerged as a game changer and seems to be the masterstroke for economic alignment. The 122nd Constitutional amendment made it possible to introduce new tax regime to fix the gaps in the existing system which is estimated to make an incremental growth of 2% in GDP. In order to investigate the success and effectiveness of the GST, the present research work explores the level of understanding, awareness and acceptance of GST among Indian consumer. Furthermore, the article also investigates the GST effect on spending behaviour of public at large. The primary data was collected from 312 respondents using random sampling from different parts of the country but only 200 responses were found fit for the study. The result shows that consumers, by and large, are acquainted with the GST structure. Moreover, study also reveals that no significant correlation exists between GST tax structure and spending behaviour of respondents.

scholarly journals Assessing the Effects of a Tobacco Tax Reform on the Industry Price-Setting Strategy

2021 ◽  
Vol 18 (19) ◽  
pp. 10376
Author(s):  
Jose Angelo Divino ◽  
Philipp Ehrl ◽  
Osvaldo Candido ◽  
Marcos Aurelio Pereira Valadao
Keyword(s):  
Tax Reform ◽  
Executive Power ◽  
Price Setting ◽  
Goods And Services ◽  
Cigarette Industry ◽  
Cross Border ◽  
Cigarette Tax ◽  
Tobacco Tax ◽  
Cigarette Brand ◽  
Price Floor

In July 2020, the Executive Power submitted Bill no. 3887-2020 as the first step towards a wide reform of the Brazilian tax system. It will replace the current PIS/COFINS (charged on turnover of companies) by the CBS (a tax on goods and services), which includes a special regime for cigarettes. The novelty is that the specific cigarette tax will be charged on the highest retail price per cigarette brand across the country. This research simulates three scenarios that differ according to the price-setting strategy of the tobacco industry in reaction to the proposed tax reform. In all simulations, the tax reform would result in considerably higher cigarette prices, lower cigarette consumption, higher tax collection, and an implicit minimum price that is far above the current official price floor. Furthermore, the price dispersion and cross-border shopping across states would be reduced because prices and tax burden per brand would tend to be the same across the country due to the dominant price-setting strategy in the cigarette industry.

scholarly journals Impact of a recent tobacco tax reform in Argentina

2020 ◽  
Vol 29 (Suppl 5) ◽  
pp. s300-s303
Author(s):  
Martín González-Rozada
Keyword(s):  
Price Elasticity ◽  
Tax Reform ◽  
Cost Effective ◽  
Cigarette Consumption ◽  
Price And Income Elasticities ◽  
Tobacco Tax ◽  
Short Run ◽  
The Government ◽  
Demand Price Elasticity ◽  
The Impact

The literature on policies for the control of the tobacco epidemic suggests that increasing excise taxes on the consumption of tobacco products is the most cost-effective policy. Cigarette tax structure in Argentina is very complex. All the tax bases for cigarette consumption taxes are related and, therefore, any modification of a tax affects the collection of the rest of the taxes. This is important given that funds raised by one of the taxes, the Special Tobacco Fund (FET), are allocated among the tobacco provinces according to the value of tobacco production. These provinces oppose in the congress to any reform that increase taxes on cigarette consumption that negatively affects these funds. In May 2016, the government decided to increase the rate of one of the taxes, the internal tax, from 60% to 75%. We study the impact on cigarettes’ demand price elasticity, consumption and tax revenues of this tobacco tax reform. Using an Error Correction Model, we estimate short-run and long-run demand price and income elasticities. We find that the tax reform of May 2016 induced an increase in the magnitude, in absolute value, of the short-run demand price elasticity and at the same time increased the funds collected by the FET. We simulate the effects of the tax reform over the government revenues and per-capita consumption of cigarettes showing that additional increments in taxes would increase revenues and diminish consumption of cigarettes.

scholarly journals Tobacco excise tax increase and illicit cigarette consumption: evidence from Vietnam

2020 ◽  
Vol 29 (Suppl 4) ◽  
pp. s275-s280
Author(s):  
Anh Nguyen ◽  
Hoang The Nguyen
Keyword(s):  
Tax Policy ◽  
Tax Reform ◽  
Tobacco Industry ◽  
Cigarette Consumption ◽  
Primary Data ◽  
Grocery Stores ◽  
Cigarette Smokers ◽  
Excise Tax ◽  
Illicit Trade ◽  
Tobacco Tax

BackgroundOne of the most significant barriers to tax reform and tax rate increases in Vietnam is the threat of illicit trade promulgated by the tobacco industry. The industry argues that higher taxes will stimulate smuggling, thereby undermining tax policy objectives and impairing the domestic tobacco manufacturing. Unfortunately, there is a dearth of updated and independent studies to verify this claim and inform the tax reform in the country.ObjectivesThe present paper attempts to generate new estimates of the illicit consumption and compare them to a prior study to ascertain the changes in the levels of the illicit trade after a tobacco excise tax increase.MethodsThe study uses primary data collected from the Tobacco Consumption Survey in late 2017. It is a multistage cluster random household survey, covering a sample size of over 2700 smokers, and purposively designed to make its results comparable to prior estimates, which have been done before the tax increase. Particularly, we collect packs from selected smokers and perform careful inspection to identify the prevalence of illicit products. In addition to the consumption, we collect data on brand choices, cigarette prices, the types of stores that the smokers bought their cigarettes, as well as their socioeconomic characteristics. They allow us to determine the regional variation of the illicit trade, identify the main illicit cigarette brands, compare the prices of the licit and illicit cigarettes, and examine the main sources of the illicit cigarettes. Incomes of the licit and illicit cigarette smokers are also compared.ResultsContrary to the tobacco industry’s predictions, our estimates demonstrate that the level of the illicit trade declined even after the increase of taxes imposed on tobacco products in Vietnam. The illicit cigarettes account for only about 13.72% of the total cigarette consumption in Vietnam in 2017, lower than the 20.7% estimate in 2012 done by the previous study. The illicit cigarettes are heavily concentrated in the southern provinces of Vietnam bordering Cambodia, and locally accessible to the smokers from grocery stores. Jet and Hero are the two most popular brands, representing over 80% of total illicit consumption in the country. Interestingly, the illicit cigarettes are on average more expensive than the illicit products in Vietnam, unlike many other countries where the former are typically cheaper than the latter. Consequently, as is to be expected, the illicit cigarette smokers tend to earn higher incomes than those smoking the licit products.ConclusionsRaising the taxes levied on tobacco does not necessarily cause higher illicit consumption in Vietnam as widely stated by the tobacco industry. The Government of Vietnam should recognise the tobacco tax policy as the most effective and cost-effective tobacco control measure and establish a clear road map of progressive tobacco excise tax increases so that total tax levied on tobacco accounts for at least 75% of retail price as suggested by the WHO to reduce smoking prevalence in the country.

scholarly journals Brand-switching and tobacco taxation in Vietnam

2021 ◽  
pp. tobaccocontrol-2021-056821
Author(s):  
Anh Nguyen ◽  
Hoang Nguyen The ◽  
Nuong Ai Nguyen
Keyword(s):  
Market Share ◽  
Tax Reform ◽  
Brand Choice ◽  
Cigarette Consumption ◽  
Excise Tax ◽  
Foreign Brand ◽  
Cigarette Brand ◽  
The Government ◽  
Specific Tax ◽  
Cigarette Prices

BackgroundThe government of Vietnam is embarking on a radical tobacco excise tax reform, switching from the current pure ad valorem scheme to a mixed system by adding a specific component. There have been concerns raised by state-owned tobacco companies against this initiative that switching to a mixed scheme may shift consumption away from cheaper, domestic brands to more expensive, foreign brands (produced locally by joint ventures between multinational tobacco companies and domestic firms) and to illicit cigarettes, thus impairing the domestic industry, rather than reducing cigarette consumption effectively. Unfortunately, although this concern has been one of the biggest obstacles to the tobacco tax reform in the country, no study thus far has attempted to address it due mostly to the unavailability of relevant micro-market data with detailed information on brand choice.ObjectivesThis research attempts to study cigarette brand substitution patterns and quantify the potential effect of the proposed tax structure change on cigarette brand choice to inform tax policy discussions in Vietnam.MethodsA discrete choice experiment is conducted to collect data on smokers’ stated brand choice when cigarette prices change exogenously. Combined with data on their current cigarette consumption, random parameter logit models were estimated and then used to calculate brand-level price semielasticities as well as numerically simulate the impact of tax reforms on smoking.ResultsSmokers are more likely to substitute a low-priced domestic brand with another domestic brand than either with a foreign brand or with an illicit brand, both of which are more expensive. Furthermore, the opt-out is one of the closest substitutes to low-priced brands and also the most sensitive to a change in their prices, implying that smokers of low-priced brands are more likely to buy none of the studied brands when cigarette prices increase. This provides strong suggestive evidence that they appear more likely to stop smoking when faced with higher cigarette prices. Imposing a specific tax tends to reduce the market share for both low-priced and high-priced licit brands, although the estimated market share reduction is larger for the former. In response to specific tax increases, a large share of current smokers do not intend to switch to illegal cigarette brands, but rather choose none of the experimented brands, suggesting their intention to quit. Finally, the magnitude of substitution to illicit brands tends to be negatively related to change in their prices as a result of the specific excise tax hike.ConclusionContrary to the raised concern, smokers are more likely to substitute a domestic brand with another domestic brand than with a foreign brand. Moreover, the threat of illicit trade should not be exaggerated, and there are actions that the government of Vietnam can take to mitigate the threat effectively.

A Study on Consumers’ Awareness on Goods and Services Tax

2018 ◽  
Vol 6 (11) ◽  
pp. 30
Author(s):  
A. Hilary Joseph ◽  
D. Kanakavalli
Keyword(s):  
Tax Reform ◽  
Subsequent Stage ◽  
State Governments ◽  
Value Addition ◽  
Goods And Services ◽  
Late Night ◽  
Single Tax ◽  
Doing Business ◽  
Ease Of Doing Business ◽  
The One

The Goods and Services Tax (GST) -- India's biggest tax reform since independence formally launched in Parliament by Prime Minister Narendra Modi and President Pranab Mukherjee came into force after 17 tumultuous years of debate, unifying more than a dozen central and state levies.  The new tax regime was ushered at the late night of 30th June and came into force on 1st July 2017.  The one national GST unifies the country's USD 2 trillion economy and 1.3 billion people into a common market.  As commented by Mr.Modi, GST is not just tax reform but its economic reform. GST is a way forward in the ease of doing business.  In the language of law, it is called the goods and services tax, but the benefit of GST is really a Good and Simple Tax. Good because multiple taxes will be removed. Simple because it requires just one form and is easy to use.  GST is a single tax on the supply of goods and services, right from the manufacturer to the consumer.  Credits of input taxes paid at each stage will be available in the subsequent stage of value addition, which makes GST essentially a tax only on value addition at each stage. The final consumer will thus bear only the GST charged by the last dealer in the supply chain, with set-off benefits at all the previous stages.  It renders numerous benefits to different parties such as business and industry, central and state governments and the ultimate consumers.  An effort is made to understand the consumers’ awareness on Goods and Services Tax. Everything that is introduced will attract agitation and unrest among different group of people and they can easily be overcome by designing programmes to clarify the objections of renowned economists.  GST will sure to have success when the confidence of every individual Indian citizens have obtained.

GST - Sway On Small Scale Industries

2019 ◽  
Vol 118 (10) ◽  
pp. 365-372
Author(s):  
Jayanti.G ◽  
Dr. V.Selvam
Keyword(s):  
State Government ◽  
Tax Reform ◽  
Small Scale ◽  
Tax Revenue ◽  
Tax System ◽  
Goods And Services ◽  
Single Tax ◽  
The People ◽  
Indirect Taxes ◽  
The Government

India being a democratic and republic country, has witnessed the biggest indirect tax reform after much exploration, GST bill roll out on 1 April 2017.  The concept of this reform is for a unified country-wide tax reform system.  Enterprises particularly SMEs are caught in a state of instability.  Several taxes such s excise, service tax etc., have been subsumed with a single tax structure. it is the responsibilities of both centre and state government to shoulder the important responsibility to cater the needs of the people and the nation as a whole.  The main basis of income to the government is through levy of taxes.  To meet the so called socio-economic needs and economic growth, taxes are considered as a main source of revenue for the government.  As per Wikipedia “A tax is a mandatory financial charge or some other type of levy imposed upon tax payer by the government in order to fund various public expenditure”   it is said that tax payment is mandatory, failure to pay such taxes will be punishable under the law.   The Indian tax system is classified as direct and indirect tax.   The indirect taxes are levied on purchase, sale, and manufacture of goods and provision of service.  The indirect tax on goods and services increases its price, this can lead to inflationary trend.  Contribution of indirect taxes to total tax revenue is more than 50% in India, therefore, indirect tax is considered as a major source of tax revenue for the government, which in turn is one of source for GDP growth.  Though indirect tax is a major source of revenue, it had lot of hassles.  To overcome the major issues of indirect tax system the government of India subsumed most of the indirect tax which in turn gave birth to the concept called Goods and Service Tax.

GSTChain: A Blockchain Network Application for the Goods and Services Tax

2021 ◽  
pp. 2250002
Author(s):  
S. Hasnain Pasha ◽  
Deepti Mehrotra ◽  
Jerry Chun-Wei Lin ◽  
Gautam Srivastava
Keyword(s):  
Network Technology ◽  
Tax Collection ◽  
Implementation Challenges ◽  
Goods And Services ◽  
Effective System ◽  
Indian State ◽  
Network Application ◽  
The Government

In 2017, the Government of India launched the goods and services tax (GST), referred to as “one tax, one nation, one market”. This tax all Indian businesses are subject to this tax. GST was framed with the objective of bringing tax handling for all businesses onto a single platform and developing a transparent and effective system in which all businesses will pay taxes. This paper identifies and addresses GST implementation challenges and proposes a solution, GSTChain, using blockchain network technology. Currently, GST is collected at the sellers end and bifurcated between the Indian state and central governments. GSTChain is a blockchain system based on trust and autonomy with the objective of making taxpayers’ lives easy and tax collection efficient and transparent for the government.

scholarly journals Goods and Services Tax(GST): Biggest Tax Reform In Independent India

2017 ◽  
Vol 5 (01) ◽  
Author(s):  
Preeti Pant
Keyword(s):  
Present Article ◽  
Fiscal Federalism ◽  
Tax Reform ◽  
State Level ◽  
Federal System ◽  
Tax Structure ◽  
Indian Government ◽  
Goods And Services ◽  
Cooperative Federalism ◽  
Sincere Effort

After a marathon debate on Goods and Services Tax (GST) bill finally India witnessed the biggest tax reform after her independence. At the midnight of 30th June, 2017 GST was launched and legally enforced by the Indian Government. It is the biggest tax reform in independent India in last 70 years and will help to modernise Asia’s third largest economy. GST is passed to imply the principle of “One Nation One Tax”. GST has oriented the Indian federal system from fiscal federalism to cooperative federalism. It is replacing the multiple layers of complex taxation currently existing in India and expected to result in simplification of indirect tax structure (at both Centre and State level). Present article includes several aspects of GST. A sincere effort has been made to highlight the implications of GST for government, industries and consumers along with its probable effects on the economy. Besides, practical difficulties related to GST have also been discussed in brief.

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