Regressive or Progressive? The Effect of Tobacco Taxes in Ukraine

Fuchs, Alan; Meneses, Francisco

doi:10.1596/1813-9450-8227

Cited by 18 publications

(27 citation statements)

References 26 publications

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“…Most commonly, antitobacco policies include smoking bans or smoke-free environments, advertising campaigns to deter consumption, smoking cessation programs, prohibitions on tobacco sales to specific populations, and taxes. The results of such policies on tobacco use and availability and on secondhand exposure remain heterogenous (Fuchs and Meneses 2017a).…”

Section: Page 4 B Tobacco Control Policiesmentioning

confidence: 99%

Distributional Effects of Tobacco Taxation: A Comparative Analysis

Fuchs¹,

Icaza²,

Paz³

2019

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Tobacco taxes have positive impacts on health outcomes. However, policy makers often hesitate to use them because of the perception that poorer households are affected disproportionally more than richer households. This study compares the simulated distributional effects of tobacco tax increases in eight low-and middle-income countries. It applies a standardized extended cost-benefit analysis methodology and relies on comparable data sources across countries. The net effect of raising taxes on cigarettes encompasses the direct negative price shock to household budgets and the long-term benefits of improved health outcomes. The distributional incidence is assessed by estimating decile-specific behavioral responses and relative income gains. The comparative results do not support the claim that tobacco taxes are necessarily regressive. Although welfare losses from the first-order price shock disproportionally affect the poor, these negative shocks are attenuated by greater price-responsiveness among lower-income groups and further offset by higher long-term relative gains through reduced medical expenditures and additional years of productive life as taxes dissuade smoking. In several countries, increasing the price of cigarettes is pro-poor and welfare improving for a large share of the population. Along with raising taxes, policy should aim at encouraging responsiveness to price changes and target tobacco-related medical expenses that disproportionally burden the poor.

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Section: Page 4 B Tobacco Control Policiesmentioning

confidence: 99%

Distributional Effects of Tobacco Taxation: A Comparative Analysis

Fuchs¹,

Icaza²,

Paz³

2019

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“…The ECBA model was adapted and applied to several country studies by Fuchs and Meneses (2017a, 2017b, based on previous work by Pichón-Riviere et al (2014) and Verguet et al (2015). Equation (1) describes the three components of the model.…”

Section: The Extended Cost-benefit Analysis Modelmentioning

confidence: 99%

“…The ECBA methodology has been adapted and applied to a variety of empirical studies by the World Bank in low-, middle-, and higher-income countries. Evidence from Bangladesh, Bosnia and Herzegovina, Chile, Indonesia, Moldova, the Russian Federation, South Africa, and Ukraine have consistently dismissed the arguments of regressive effects of increasing taxes on tobacco (see Fuchs, Del Carmen, and Mukong 2018;Fuchs and Matytsin 2018;Fuchs and Meneses 2017a, 2017bFuchs, Orlic, and Cancho 2019). Findings across these countries suggest that increasing taxes on tobacco is non- The literature has generally estimated the price elasticity of demand for cigarettes among adults at between -0.3 and -0.8 (CBO 2012;Chaloupka and Warner 2000;Gallet and List 2003;IARC 2011).…”

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confidence: 99%

“…This has been shown in recent estimations based on household survey data from a variety of countries, including Bangladesh, Bosnia and Herzegovina, Chile, Indonesia, Moldova, Russia, and Ukraine. Fuchs, Del Carmen, and Mukong 2018;Fuchs and Matytsin 2018;Fuchs and Meneses 2017a, 2017bFuchs, Orlic, and Cancho 2019). 9…”

mentioning

confidence: 99%

“…Different ECBA models have been applied in the health literature to estimate the effects of tobacco on health and economic outcomes. This interpretation of the ECBA was adapted byFuchs and Meneses (2017a, 2017b with an emphasis on empirical applications to household survey data. The reader should refer to the original work by Pichón-Riviere et al (2014) and Verguet et al (2015) for further methodological details.A partial equilibrium approach is taken to simulate the impact on household welfare, from an increase in the price of the tobacco product.…”

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confidence: 99%

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The Welfare and Distributional Effects of Increasing Taxes on Tobacco in Vietnam

Tarlovsky¹,

Icaza²

2019

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Taxation of tobacco, alcohol, and sugar-sweetened beverages: reviewing the evidence and dispelling the myths

Paraje,

Jha,

Savedoff

et al. 2023

BMJ Glob Health

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The article reviews the large body of evidence on how taxation affects the consumption of tobacco, alcohol, and sugar-sweetened beverages (SSB). There is abundant evidence that demand for tobacco, alcohol, and SSB is price-responsive and that tax changes are quickly passed on to consumers. This suggests that taxes can be highly effective in changing consumption and reducing the burden of diseases associated with consuming these products. Tobacco, alcohol, and SSB industries oppose taxation on similar grounds, mostly on the regressivity of taxes since regressive taxes take a larger percentage of income from low income earners than from middle and high income earners; but also on the effects taxes might have on employment and economic activity; and, in the case of tobacco, the effects taxation has on illicit trade.Contrary to industry arguments, evidence shows that taxation may have short-term negative financial consequences for low-income households. However, medium and long-term financial benefits from reduced healthcare costs, better health, and welfare largely compensate for such consequences. Moreover, taxation does not negatively affect aggregate economic activity or employment, as consumers switch demand to other products that generate employment and may compensate for any employment loss in taxed sectors. Evidence also shows the revenues generated are generally spent on labour-intensive services. In the case of illicit trade in tobacco, evidence shows that illicit trade has not increased globally (rather the opposite) despite increases in tobacco taxes. Profit-maximising smugglers increase illicit cigarette prices along with the increases in licit cigarette prices. This implies that even when increased taxes divert some demand to the illicit market, they push prices up in the illicit market, discouraging consumption.

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Regressive or Progressive? The Effect of Tobacco Taxes in Ukraine

Cited by 18 publications

References 26 publications

Distributional Effects of Tobacco Taxation: A Comparative Analysis

Distributional Effects of Tobacco Taxation: A Comparative Analysis

The Welfare and Distributional Effects of Increasing Taxes on Tobacco in Vietnam

Taxation of tobacco, alcohol, and sugar-sweetened beverages: reviewing the evidence and dispelling the myths

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